Nigeria’s credit rating drops to negative

THE International credit rating agency, Standard & Poor’s (S&P), announced on Monday that Nigeria’s credit rating has lowered to negative.

Nigeria’s current declining foreign exchange reserves have brought the country to the negative category on the rating.

In finance, credit rating is a quantified assessment of the creditworthiness of a borrower in general terms or with respect to a particular debt or financial obligation

The sovereign credit rating indicates the risk level of the investing environment of a country and is used by investors when looking to invest in particular jurisdictions, and also takes into account political risk.






     

     

    According to the credit rating agency, there are two categories a country can belong to after an assessment which is stable or negative.

    Foreign-exchange reserve levels have fallen from $45 billion at mid-year 2019 to $38 billion at end-2019 and fell to $36.5 billion in February 2020.

    With S&P’s outlook change, all three international rating agencies now have a “negative” outlook on Nigeria’s sovereign credit rating.

    With the recent low rating recorded by S&P, foreign and domestic investors are likely to have sentiments on whether to invest in the Nigerian market or not.

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