As Nigeria undergoes reforms, the market has responded positively with Nigeria’s bonds outperforming peer countries, according to the Bank of America report.
The country’s current spread came in tighter than Angola, Egypt and Kenya for five-year, 10-year and 30-year, which made the country’s rating reflect B (implied rating), higher than the actual rating of B-.
In November 2022, Fitch downgraded the country’s credit rating to B- due to the continued deterioration of the fiscal and debt position despite the elevated oil prices. Not quite long after, Moody followed suit by downgrading to Caa1 with a stable outlook.
The Bank of America says it expects a likely upgrade of the country’s rating considering the performance of the market and key policy reforms. Analysts affirm the possible upward review of the country’s rating as the recent policy suggests a better fiscal position.
However, the debt position and debt servicing might hinder the desired upgrade as total public debt is expected to climb to around N81 trillion as of June 2023 and debt servicing continues to rise.