STANDARD & Poor’s global ratings release showed that  Nigeria’s sovereign credit rating sank to ‘B-’ due to crashing international oil prices following lower oil demand tied to the coronavirus pandemic.

Moody’s credit rating for Nigeria was last set at B2 with negative outlook while Fitch’s credit rating for Nigeria was last reported at B+ with a negative outlook.

A credit rating is used by sovereign wealth funds, pension funds and other investors to gauge the creditworthiness of Nigeria.

This rating shows the impact on the country’s borrowing costs.

Global rating agency Standard & Poor’s has downgraded Nigeria’s credit rating further into weak external position due to the oil price crash.

According to the report, the federal government policy responses are unlikely to be effective enough to reduce the effect of lower oil prices which is already hurting Nigeria’s external and fiscal positions, and putting further pressure on the foreign exchange reserve.

Junk bonds are typically rated ‘BB’ or lower by S&P.

B is a notch lower than BB and a speculative grade.

S&P had in early March lowered its outlook on Nigeria from “stable” to “negative” after Moody’s and Fitch slammed lower ratings on the country.

The latest downgrade of B- is only one notch above CCC which would mean that Nigeria is currently highly vulnerable to non-payment, and S&P expects default to be a virtual certainty, regardless of the anticipated time to default.