Last week Reuters reported that the S&P downgraded Nigeria’s rating outlook to negative from “credit watch negative” it hitherto was. Whilst we still remained at ‘BB-’ long-term sovereign credit rating the switch to negative will most likely affect the foreign direct investment into the country. So what is to blame for this?
The rating agency blamed the infighting in the ruling PDP as the cause for the negative outlook. According to Reuters they cited the continued in fighting within the PDP “which as heightened political and institutional risk” in Nigeria. Off course the Government reacted negatively to this with newspaper reports quoting the Minister of Finance as saying
the move by the agency was unacceptable, especially on the issue of lack of information. She reportedly said the agency should have upgraded their information on the country by reaching out to the relevant contacts and agencies it deals with during the rating exercise.
She explained that S&P was under pressure last week to file its ratings on sovereign countries and other obligors owing to the change of regime imposed on rating agencies by the US government, which requires them to submit reports twice a year.
