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Bond Market News

Nigeria Downgraded to B- by Fitch

Nigeria was downgraded to B- from B by Fitch. This comes on the back of a deterioration in debt servicing costs and external liquidity despite higher oil prices this year. Fitch notes this was due to low oil production and an expensive subsidy on petrol (costing 2.4% of GDP) that offset the benefit from high oil prices. Nigeria’s general government (GG) debt is set to increase to 34% of GDP by end-2022 with its debt servicing metrics being the worst among Fitch-rated sovereigns. For example, Nigeria’s debt/revenue is said to rise to 580% in 2022 and interest/revenue ratio to 47.7% vs. current B-rated medians of 282% and 10.8% respectively. Also high inflation at 20.8% in October continues to weigh on the sovereign.

Nigeria’s dollar bonds were trading higher with its 6.5% 2027s up 1.1 points to 79.63, yielding 12.01%.

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