Posted by S & P on
In a new initiative to support the growth and transparency of the domestic bond market and improve the availability of long-term funding for the public and emerging private sector, Standard & Poor's Ratings Services today announced the launch of a national credit rating scale for the Federal Republic of Nigeria (BB/Stable/B local currency; BB-/Stable/B foreign currency).
New Scale Will Support Development of Nigeria's Domestic Naira Bond Market and Ease Pressure on Local Banks
Aug 14 - In a new initiative to support the growth and transparency of the domestic bond market and improve the availability of long-term funding for the public and emerging private sector, Standard & Poor's Ratings Services today announced the launch of a national credit rating scale for the Federal Republic of Nigeria (BB/Stable/B local currency; BB-/Stable/B foreign currency).
The Nigeria national scale is designed to appeal to a wide range of companies and institutions seeking to raise capital in Africa's most populous state, as it enables Standard & Poor's to offer a much finer distinction in the credit quality of local debt issuers than is allowed by its global ratings scale. It will provide issuers, counterparties, intermediaries, and investors in the country's financial markets with both debt ratings, which apply to a specific debt instrument, and issuer credit ratings, which apply to a specific obligor.
"High global oil prices, strong macroeconomic growth, and increased involvement by international investors in the country's maturing financial markets have created a boom period for Nigeria, already firmly established as the financial hub of West Africa," said Konrad Reuss, Standard & Poor's Managing Director, South & Sub-Saharan Africa. "Although the Nigerian domestic debt market is still relatively small by international standards, private sector interest in naira-denominated assets is rising. Standard & Poor's believes the market will grow rapidly in the coming years as local and federal governments, banks, and infrastructure projects seek to fund long-term projects."
Recognizing the importance of developing the domestic Nigerian bond market on the African continent, the African Development Bank [AFDB.UL] issued its first Nigerian naira bond in 2007, with Naira-denominated bond market capitalization reaching approximately $US45 billion by the beginning of 2007. The Pension Reform Act of 2004 has also been instrumental in creating a local investor base that is now looking to credit ratings to provide an objective and rigorous assessment of credit quality.
"Standard & Poor's new Nigerian national scale is a unique instrument for measuring the credit risk associated with issuers and debt instruments operating in the Nigerian market, launched in response to specific demand from local market participants," said Rob Richards, Standard & Poor's Managing Director. "Standard & Poor's extensive experience in national scales will positively contribute to a better informed, more liquid, and more efficient capital market in Nigeria."
Standard & Poor's Ratings Services has contributed to the development of credit markets in important emerging economies around the world through the use of national rating scales. These markets include the Republic of Argentina, the Federative Republic of Brazil, the United Mexican States, Taiwan (Republic of China), The Russian Federation, Ukraine, Republic of Kazakhstan, Republic of South Africa, and Republic of Turkey.
For further information on potential questions regarding Nigeria national scale ratings and the rating process, see the Credit FAQ article titled "Standard & Poor's Nigeria National Scale Ratings," published today on RatingsDirect.
These terms and conditions contain rules about posting comments. By submitting a comment, you are declaring that you agree with these rules:
Failure to comply with these rules may result in being banned from further commenting.
These terms and conditions are subject to change at any time and without notice.