Moody’s Investors Service (“Moody’s”) reviews all of its ratings periodically in accordance with regulations either annually or, in the case of governments and certain EU-based supranational organisations, semi-annually. This periodic review is unrelated to the requirement to specify calendar dates on which EU and certain other sovereign and sub-sovereign rating actions may take place.
Moody’s conducts these periodic reviews through portfolio reviews in which Moody’s reassesses the appropriateness of each outstanding rating in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. Since 1st January 2019, Moody’s issues a press release following each periodic review announcing its completion.
Moody’s has now completed the periodic review of a group of issuers that includes Nigeria and may include related ratings through a discussion held on 19 May 2021. The review did not involve a rating committee, and this publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future; credit ratings and/or outlook status cannot be changed in a portfolio review and hence are not impacted by this announcement.
The credit profile of Nigeria (issuer rating B2) reflects “ba2” economic strength, supported by the country’s substantial oil and gas endowment and long-term growth prospects, though constrained by very low GDP per capita; “caa3” institutions and governance strength, with very weak institutional capacity, high levels of corruption, and very poor policy effectiveness; “b1” fiscal strength, with relatively low levels of public debt but a high and deteriorating interest payments to revenue ratio explained by an underdeveloped revenue base, itself over-reliant on hydrocarbon revenues; and “ba” susceptibility to event risk driven by political risk, due to a fractious political landscape, militancy in the Niger Delta, and violence in the north-east that aggravates income inequality.