Fitch Ratings Rule Out Debt Restructuring For Nigeria

Following the downgrade of the country’s ratings to ‘B-’ from ‘B’ last weekend, international rating agency, Fitch Ratings has said although it considered a further negative rating for Nigeria, it does not expect that the country will restructure its debt in the medium to near term.

This was stated by the Fitch director, Sovereign Ratings, Jermaine Leonard yesterday in Lagos. According to him, the rating agency is not concerned that there will be a debt restructuring announcement over the next six months or even next year.

Investors had become jittery last month after news of a possible consideration by the federal government to restructure its debt obligations which has so far soared to over N42 trillion. Fitch also last weekend downgraded the country’s ratings which reflects continued deterioration in Nigeria’s government debt servicing costs and external liquidity despite high oil prices in 2022.

Leonard who spoke via Zoom at the Fitch on Nigeria event noted the debt burden of the country continues to remain a cause for concern as it would have a negative impact on the ability of the fiscal authority to support economic growth.

Speaking on the recent ratings release, he said “we talked about whether we needed to take additional negative action because we were concerned about some debt restructuring issues. Ultimately, we decided that we don’t think that debt restructuring is a big near-term risk.  Instead, what we think the issue is that these debt servicing burden will remain quite high to medium term.’’