S&P slashes Nigeria credit rating on oil production drop

Ratings agency Standard & Poor’s cut Nigeria’s credit rating on Friday, saying the drop in oil production and a restrictive foreign exchange regime was hurting its economic prospects.

In making the downgrade to ‘B/B’, S&P said that Nigeria’s delay in passing an expansionary budget along with taking on more debt had increased its credit risk. Highlighting “steep increases” in the debt servicing ratio, S&P warned that the country had to focus on improving its non-oil revenue.

“The oil sector narrowed the most in the second quarter, falling by close to 20% year-on-year following intensified pipeline vandalism in the Niger delta,” S&P said. But it also added that if Nigeria was able to respond to its economic crisis with sound policies — including anti-corruption measures that “materially” boosted non-oil revenues — the economy could return to higher growth by 2018.