S&P cuts Nigeria to B+ on weak oil, cites political risk

 

Credit agency Standard & Poor's downgraded Nigeria's rating to B+ from BB- on Friday, saying the decline in oil prices in the past seven months had significantly affected the country's finances.

Setting a stable outlook on the new rating, it also said political risk was a significant factor while the country's non-oil sector would support economic growth.

Nigeria holds a presidential election on March 28 when Goodluck Jonathan will seek another term. He faces former military ruler Muhammadu Buhari in what is expected to be the tightest ballot since the start of civilian government in 1999.

S&P said that while the west African country had taken numerous measures to counteract the effects of falling oil prices, such as tightening the 2015 budget and monetary policy, it believed the tense political atmosphere might undermine efforts to introduce other measures.

"The tightly contested general elections and potential underperformance on oil production may pose risks to the implementation of the federal economic management team's proactive and ambitious fiscal consolidation plans," it said.

S&P noted that Nigeria relies on oil and gas for about two-thirds of its fiscal revenues and over 90 percent of its exports, and that falling oil prices had notably impacted current account position.
But it added that the fastest growing sector, services, now accounted for more than 50 percent of GDP while oil and gas had shrunk to 14 percent.

An average current account deficit of 1.8 percent of GDP was expected for the period 2015-2018, it said, and annual economic growth was expected to average 5 percent in the same period.
The growth forecast was down from S&P's September report that expected a rate of 6.2 percent for the 2015-2017 period.

Fitch Affirms Nigerian State of Rivers at 'BB-'; Outlook Stable

 

Fitch Ratings has affirmed the Nigerian State of Rivers' Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'BB-' and its National Long-term rating at 'AA-(nga)'.

The Outlooks are Stable. A draft rating action commentary (RAC) was submitted by Fitch to the State of Rivers on 11 March 2015, in line with the scheduled calendar.

As the issuer raised an appeal in relation to the draft RAC, the applicable committee review of which has now been held by Fitch, final publication of the RAC has been delayed until the above date.

Read more here...

Brent oil falls on Opec output, Iran

 

Brent crude oil fell towards $54 a barrel on Friday and was on track for its third straight weekly loss, hurt by oversupply worries after Kuwait said Organisation of the Petroleum Exporting Countries (Opec) had no choice but to maintain output levels.

Brent for May delivery had fallen 33c to $54.10 by 9.31am . The contract is set to decline by more than 1% this week.

US crude for April delivery slipped 21c to $43.75 a barrel, headed for its fifth weekly loss. The contract expires on Friday.

Kuwait’s oil minister said on Thursday that Opec had no choice but to shun oil output cuts, reiterating the view from the emirate that the group will hold its course when it meets next in June.

Nigeria's Unity Bank swings to 2014 pretax profit

 Nigeria's Unity Bank swung to pretax profit of 13.63 billion naira ($68 million) in 2014 versus a pretax loss of 33.63 billion naira in the previous year, it said on Friday.

The lender said in a statement that the middle tier bank's revenue rose to 62.63 billion naira from 52.19 billion naira.

Nigerian interbank rates ease on government budget cash flow

 

 Nigerian interbank lending rates fell to 9 percent on average on Friday compared with 25 percent last week in anticipation of monthly budgetary allocations to government agencies.

Nigeria distributes revenue from oil exports among its three tiers of government - federal, states and local government - every month. Dealers said February allocations would filter through the banking system by close of business on Friday.

Cost of borrowing among banks had shot up to 25 percent last week partly because of debiting of banks' accounts for premium payment to the Nigerian Deposit Insurance Corporation (NDIC).

The secured Open Buy Back (OBB) fell to 9 percent from 25 percent last week. The secured fund was 4 percentage points below the 13 percent central bank's benchmark interest rate.

Overnight placement also fell to 9 percent against 25 percent last week.

Lending rates among banks are expected to stay steady next week because of the anticipated increase in liquidity from the disbursal of monthly budget allocations.

Low prices will hamper Nigeria's bid to boost output: Allison-Madueke

 

Consistently low oil prices will hamper Nigeria's bid to boost output to 4 million barrels per day (bpd), Oil Minister Diezani Alison-Madueke was quoted as saying on Tuesday.

"Flexibility in capex and funding in general will be further constrained in the year 2015," the minister said in a speech read out by Joseph Dawha, group managing director of the Nigerian National Petroleum Corp.

"Consistently depressed oil prices will limit industry's scope to manoeuvre ... and reaching the target of 4 million bpd," she said. "The industry must challenge itself to raise funding in order to meet these targets."

Alison-Madueke is also president of the Organization of the Petroleum Exporting Countries (OPEC).

Read more here on Reuters

Dangote group expects $9 bln refinery to start by 2017

 

A new $9 billion oil refinery producing 500,000 barrels per day being developed by Africa's richest man, Aliko Dangote, is expected to come onstream in Nigeria by 2017, a senior Dangote Group official said Tuesday.

The refinery, to be located in Lagos, will cut reliance on international markets for Africa's largest oil producer, which imports more than 80 percent of its fuel needs.

The lack of sufficient refining capacity is a major handicap in Africa's biggest economy.

"By the third quarter of 2017, we expect to be looking at commissioning," Mansur Ahmed, Dangote Industries Ltd's executive director of stakeholder management and corporate communications, told Reuters at an African refiners conference in Cape Town.

The refinery is being designed to process Nigerian crude mix and produce products conforming to Euro V fuel specifications, as fuel demands across the continent are forecast to rise rapidly with many countries enjoying strong economic growth.

Poor infrastructure, competitive global markets and financial constraints have traditionally held back Africa's refining capacity, while fuel subsidies in Nigeria are also an issue, said Ahmed, who spoke on behalf of Aliko Dangote.