In a significant vote of confidence, Moody’s Investors Service upgraded Nigeria’s sovereign credit rating from Caa1 to B3 on Friday, citing improvements in the country’s foreign exchange reserves and fiscal position. At the same time, data revealed that the Nigerian Exchange Limited (NGX) delivered a remarkable N7.7 trillion gain in market capitalization during the first five months of 2025, reflecting renewed investor optimism.
Moody’s Upgrade Reflects Stronger External and Fiscal Metrics
Moody’s decision to raise Nigeria’s issuer rating to B3, with a stable outlook, hinges largely on two key factors: a revamped foreign exchange framework that has bolstered the Central Bank of Nigeria’s (CBN) reserves and early signs of easing inflation. In a statement, the ratings agency noted that the overhaul of Nigeria’s FX management has “markedly improved the balance of payments,” while reduced inflationary pressures and lower domestic borrowing costs suggest greater stability. Moody’s added that, although external and fiscal gains may slow if oil prices decline, they do not appear poised to reverse.
Federal Government Hails Growing Confidence
Finance Minister and Coordinating Minister of the Economy Wale Edun welcomed the upgrade, emphasizing that it underscores both domestic and international faith in President Bola Tinubu’s reform agenda. “This upgrade follows Fitch Ratings’ recent move from B– to B with a stable outlook,” Edun said. “It reflects our administration’s commitment to stabilizing the economy, attracting investment, and ensuring sustained, inclusive growth.” Under Tinubu’s watch, Nigeria has implemented tough but necessary measures—eliminating fuel subsidies, improving revenue collection and forging private-sector partnerships—to address long-standing economic challenges.
Edun stressed that the government will continue partnering with the CBN to uphold macroeconomic stability, maintain debt sustainability and deliver sound fiscal management. “Our focus now is accelerating rapid, sustained and inclusive growth with the support of both domestic and foreign private investment,” he added.
NGX Gains N7.7 Trillion as Investors Flock Back
Parallel to the ratings upgrade, Nigeria’s stock market posted a 12.3 percent jump in market capitalization, climbing from N62.763 trillion at year-end 2024 to N70.46 trillion by the close of May 2025. After a cautious start in January—when the market rose by N1.95 trillion—February saw a further N2.48 trillion gain. A brief lull in March, when the market dipped by N936 billion, gave way to renewed momentum in April (up N239.03 billion) and a strong May surge.
The NGX All-Share Index surpassed 110,000 basis points for the first time this year, closing May at 111,742.01 points—an 8.56 percent rise from its January opening. Analysts attribute this bullish run to better corporate earnings, moderating inflation, and restored confidence in a more stable foreign exchange environment.
Analysts Remain Cautiously Optimistic
Aruna Kebira, Managing Director of Globalview Capital Limited, praised the market’s resilience, noting, “Despite volatility and external headwinds, the first five months of 2025 have shown a generally positive performance. Banking sector recapitalization, strong corporate earnings and a more stable naira have been the main drivers.”
Looking ahead to June, Kebira advised investors to watch forthcoming policy announcements, macroeconomic data—especially inflation and exchange rate trends—and half-year corporate results. “The banking sector is poised to remain a key catalyst, and companies that navigate the current economic climate well should continue to outperform,” he said.
David Adonri, Vice President of Highcap Securities, echoed these sentiments. He pointed to the foreign exchange stability as a boon for the consumer goods sector, which has seen heightened buying interest and improved valuations. “As major enterprises recover from the shock of naira floatation, we expect the stock market to maintain its positive momentum through Q2,” Adonri noted.
Built on Reforms, Poised for Growth
With a stronger credit rating and a vibrant stock market, Nigeria appears poised to capitalize on its recent policy reforms. Continued collaboration between the Ministry of Finance and the CBN will be critical to sustaining confidence. If current trends hold, by year’s end Nigeria could see increased foreign investment, deeper capital markets and, ultimately, more robust economic growth.
In the coming months, all eyes will be on inflation figures, oil revenues and corporate earnings reports. For now, though, Friday’s Moody’s upgrade and the NGX’s N7.7 trillion gain offer tangible proof that Nigeria’s turnaround is no longer wishful thinking but unfolding reality.