Jan 16, 2015/Bloomberg

Attacks by Boko Haram in Nigeria are adding pressure to the nation’s credit rating as plunging oil prices undermine growth in Africa’s largest economy, according to Moody’s Investors Service.

The violence may be “weighing on investor demand for Nigerian assets at the moment,” Matt Robinson, manager of the Africa sovereign ratings team at Moody’s, said by phone from London yesterday. “We’re certainly seeing pressure on the currency, we’re seeing pressure on Nigeria’s bond prices, so it’s one of an array of downside risks.”

Nigeria, Africa’s biggest oil producer and most populous nation of more than 170 million people, will hold elections next month in the face of increasing violence by the Islamist militant group Boko Haram. Its attacks during a six-year campaign to impose Islamic law in the country has led to the deaths of more than 13,000 people, according to the government.

Moody’s rates Nigeria’s debt at Ba3, the three levels below investment grade, with a stable outlook.

A halving in the oil price since June last year has undermined Nigeria’s economic outlook, weighing on the nation’s credit rating quality, Robinson said. Windfall gains from higher oil prices in previous years weren’t necessarily saved in the sovereign wealth fund, he said.

Oil accounts for 75 percent of government revenue in Nigeria. The central bank devalued the currency for the first time in three years in November as foreign-currency reserves declined. The naira has fallen 14 percent against the dollar on the interbank market since the start of last year and was trading at 185.05 as of 5:26 p.m. in Lagos, the commercial capital.

“The extent to which we see the precipitous decline in oil prices will dampen growth prospects” in Nigeria, and other crude producers, including Angola and Gabon, and put pressure on public finances, he said.

Financing the budget deficit in Nigeria is easier than in some other African oil producers because the government has a deeper domestic market to tap, Robinson said.