UBS CIO: Nigeria’s creditworthiness improved by higher commodity prices and stronger economic outlook

  • Encouraging economic prospects end years of deteriorating credit ratings in Africa, according to the latest report by UBS Wealth Management’s Chief Investment Office.
  • Nigeria is expected to recover from recession this year although growth rates are unlikely to return to previous highs.
  • Progress on the Naira’s exchange rate liberalization is crucial for Nigeria’s medium-term growth outlook.

Wealth Management’s Chief Investment Office (CIO) has launched a new report on Africa’s sovereign credit prospects, an important benchmark used to evaluate the risk of investing in a country. The report concludes that after years of deterioration, the credit outlook of many African sovereign issuers is stabilizing or improving.

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Africa’s sovereigns have been hit by a range of issues in recent years, including the end of the commodity super cycle, depreciating exchange rates and mounting public debt ratios. Energy exporters, such as Nigeria, were particularly affected.

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Nigeria, Africa’s largest economy, has seen several credit rating downgrades in recent quarters, but the recent recovery in energy prices and the potential for further moderate upside should bode well for the sovereign’s creditworthiness.

According to the report’s findings, however, macroeconomic prospects in the region are beginning to improve. The International Monetary Fund (IMF) forecasts real GDP growth to almost double this year in …read more

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Source:: MediaCraft