Posted by By Emma Ujah on
NIGERIA has obtained a BB- foreign credit rating, Minister of Finance, Dr. Ngozi Okonjo-Iweala, announced yesterday in Abuja.
ABUJA - NIGERIA has obtained a BB- foreign credit rating, Minister of Finance, Dr. Ngozi Okonjo-Iweala, announced yesterday in Abuja.
International investors use credit ratings as a benchmark for assessing the risk to assign to corporate organisations operating within a country and, therefore, use it as a tool for decision making in terms of investment flow, while financial institutions use it to determine the level of interest to charge on credit going to such a nation.
The rating which was the first categorisation of the country, according to the minister, has placed the nation on a footing for better consideration in terms of Direct Foreign Investments (DFIs) as well as low credit flow into the economy.
According to Dr. Okonjo-Iweala, the categorisation which was done by Fitch Ratings 'heralds our increasing acceptance by the international community as a ‘responsible member' of that community.
'The BB(-) long term credit rating is a normal recognition of the improvements that have been made over the last few years from a situation where none of the global rating agencies was prepared to issue Nigeria with a credit rating to the one that places our sovereign risk in the same category as that of some other middle income emerging economies such as Brazil, Indonesia, Vietnam, Turkey, India and the Philippines."
The minister said in practical terms, the rating would benefit the nation's economy as it would become a pricing benchmark and would possibly reduce the cost of funds for Nigerian corporate business organisations and banks that would like to raise credit from abroad. Besides, she said the new development would increase access by Nigeria and its corporate organisations to international bond and other capital markets.
Dr. Okonjo-Iweala admitted that the BB- rating of Nigeria was lower than the investment grade and, therefore, did not represent the aspirations of the nation's leaders, but noted: 'It remains a significant first step."
Fitch Ratings is a leading global rating agency committed to providing the world's credit markets independent, and prospective credit opinions. It was built on a foundation of organic growth and strategic acquisitions, having grown throughout the world and across all fixed income markets.