_By Peter OBIORA InvestAdvocate
London (INVESTADVOCATE)-Moody’s Investors Service, Global Credit Research Firm Wednesday assigned local and foreign currency issuer rating of Ba3 to the Federal Government of Nigeria (FGN); B1 to Kenyan and Zambian Governments respectively; affirming the outlooks of the ratings as stable.
This is contained in a Statement Wednesday from Omamuli Weyinmi, Vice President Seniour Analyst, Sovereign Risk Group of the Company and made available to www.investadvocateng.com .
On the part of Nigeria, Moody’s said the Ba3 rating reflects the following factors; that Nigeria’s strong economic resilience and strength; which are underpinned by its vast hydrocarbon wealth is relatively large size and developed non-energy sector, but offset by significant infrastructural needs.
Another factor is that still evolving governance structure forms a key challenge for Nigeria’s Institutional Strength.
The Moody’s Report further affirmed that other factors reflecting the Ba3 rating is the establishment of a Sovereign Wealth Fund (SWF); which should support Nigeria’s Financial Strength and the country’s moderate event risk due to the heightened security conditions in the North of Nigeria.
In the same vein, Moody’s assigned a Baa3 local currency country risk ceiling which is the maximum credit rating achievable in local currency for a debt issuer domiciled in that country.
Moody’s also assigned Ba1 foreign currency Bond country ceiling and a B1 country ceiling for foreign currency Bank deposits. “These ceilings are lower than the local currency ceiling as they also capture foreign-currency transfer and convertible risks†Moody’s said.
On its rating rationale on Nigeria, Moody’s named four (4) key factors; and the first one underlying Moody’s assignment of a Ba3 rating to Nigeria the expectation of continued strong economic growth given the country’s proven resilience to economic shock; as demonstrated during the global economic crisis and Nigeria’s domestic banking crisis in 2008-09.
The Report affirms that Moody’s expects the Nigerian economy to grow by 7.1 percent (7.1%) this year; slightly down from 7.4% in year 2011 as a result of the higher interest rate environment.
The number two (2) factor reflected in the rating is Nigeria’s weak institutional strength; even relative to its Ba3-rated peers. “Nigeria’s very low World Bank Governance scores placed the country in the bottom quintile of Moody’s rated countries in terms of governance†the Report said.
The third key factor of the Ba3 rating by Moody’s to Nigeria is the establishment of a Sovereign Wealth Fund. Moody’s said the Nigerian Sovereign Investment Authority (NSIA) to save and invest the country’s future Oil Windfall, is a positive for Nigeria’s financial strength.
The number four (4) factor informing Moody’s Ba3 rating of Nigeria is the country’s moderate risk event, which is driven by the heightened security in the North of Nigeria.
As earlier stated, Moody’s assigned a local and foreign currency issuer rating of B1 to the Government of Kenya and Zambia respectively affirming the outlooks on the ratings as stable.
Click to download Reports on Nigeria
Click to download Reports on Kenya
Click to download Reports on Zambia
