Fitch’s rating for Nigeria
Fitch has assigned Nigeria “BB-”, its first credit rating. The rating is just three notches from investment grade and is on par with Serbia, Turkey and Ukraine.
Nigerians have received it well. This day reports that:
The rating…should help attract foreign direct investment and allow Nigerian companies to borrow money in the international financial market by issuing bonds.
…
[Tony Elumelu, MD of UBA]We’ve been saying the government should create enabling environment for us. This landmark event we are celebrating is the starting point.
Not everyone is convinced. Some are concerned about a possible increase in debt level amongst Nigerian corporates:
Tim Ash, an economist at Bear Stearns still feel a bit uncomfortable with the “BB-” rating, given the huge over-dependency of the economy on oil, the history of strained relations between the federal and state level governments, and political, social and inter-ethnic conflicts
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The obvious concern now is that armed with this favourable rating, Nigeria will see a big increase in commercial debt, and potential problems for the future. Hopefully, the Debt Management Agency will keep a tight reign on commercial borrowing
Good stuff.
Tags: Business, Nigeria
Comments (2)
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