The sacking of the five banks’ chief executives has increased Nigeria’s credit risk in the international market . This means it is now riskier for foreigners to do business in Nigeria.

This development was announced by Standard & Poor- a leading provider of financial market intelligenc. yesterday.

It reviewed downward the nations’ foreign currency credit rating from B-plus from BB-minus S&P in a statement said that, “Nigeria, sub-Saharan Africa’s second-biggest economy, has a stable outlook, adding that the financial, economic and political risks are balanced by a strong external and fiscal balance sheet.

money

“The lowering of the sovereign rating on Nigeria reflects our view of the government’s reduced fiscal flexibility due to costs associated with its recent bail-out of five large domestic banks, and also the fall-off in government oil revenue,” the firm said in a statement.

“In our opinion, the central bank’s action has begun a welcome restructuring of Nigeria’s banking system, but it also reveals deep problems in Nigeria’s credit markets, with the extent of problem loans beyond our previous estimates,” S&P said.

Standard & Poor’s is a leading provider of financial market intelligence. The world’s foremost source of credit ratings, indices, investment research, risk evaluation and data, Standard & Poor’s provides financial decision-makers with the intelligence they need to feel confident about their decisions.

Many investors know Standard & Poor’s for its respected role as an independent provider of credit ratings and as the home of the S&P 500 benchmark index. But Standard & Poor’s global organization also: Provides a wide array of financial data and information,

Is the largest source of independent equity research and a leader in mutual fund information and analysis.
But another rating agency, Fitch Ratings however said earlier on Friday it did not see any immediate sovereign rating implications from the central bank’s actions.

The firm applauded the bailout and said it did not think further government assistance on the same scale was likely.

http://www.vanguardngr.com/2009/08/22/banking-crises-nigeria%E2%80%99s-rating-drops/

Oh boy this is scary, they say that bad news comes in torrents. Its as if bad news never stops coming when it concerns this country.

Of course when Federal Government pumps money into institutions, there will be less to spend unless they issue bonds or the CBN uses the money it has available which no rating agency will have access to know how much a CBN has in its reserve (not foreign reserve). Though, the CBN was able to meet its forex demand yesterday.

OFF TOPIC

Who still takes the rating agency seriously? Fitch, Moody and S & P.


I can remember Lehanm Brothers had a AAA rating the Friday before it went bust (it filled for bankruptcy on Monday)

Ren. Cap. had a buy rating for intercontinental few months ago

This rating agencies are also conflict of interest. The Banks, companies pay them to give them a rating, is it the higher you pay the better? Another thing is most of the people that work for this agencies have worked for the banks, companies.

Who still takes the rating agency seriously? Fitch, Moody and S & P.

I can remember Lehanm Brothers had a AAA rating the Friday before it went bust (it filled for bankruptcy on Monday)

This rating agencies are also conflict of interest. The Banks, companies pay them to give them a rating, is it the higher you pay the better? Another thing is most of the people that work for this agencies have worked for the banks, companies.

I spent spring break on wall street and when we there we went to Standard & Poor's and we asked these guys this questions. Trust me it was so hard to rate those CDO's, nobody knew how to rate them so they just assumed that house prices would always keep rising (which were the underlying assets these securities were based on). These guys have firewalls that seperate the various depts. which means that there is NO communication between say investment research and risk evaluation.

is it the higher you pay the better?

No, its not the higher you pay the better, you just pay them to rate you and that's it.

Some of those rating institutions are fraudsters.

Some of those rating institutions are fraudsters.

Please don't talk about what you don't know. Not every country in the world is like naija.

davidif:

Please don't talk about what you don't know. Not every country in the world is like naija.

Why are u contradicting yourself you are the same guy that support the fact Lehman brothers was highly rated by this same rating institution and following week filled bankruptcy.

Please makeup your mind

Why are u contradicting yourself you are the same guy that support the fact Lehman brothers was highly rated by this same rating institution and following week filled bankruptcy.

Please makeup your mind

No i am not contradicting myself, i am actually playing devil's advocate for them. I was rebuking the guy because he didn't know what he was saying.

"Standard and Poors na total scam." They don't rate credit risk these days, they rate credit fallout. It is after the effect of the risk has manifested that they make pronouncements.


Their name should be Poor Standards. Bloody bribe takers.

I am surprised that Nigeria has any rating at all

@Davidif

Those rating firms are fraudsters; they should leave us alone we do not need them.

YES!!!!! WE NEED THEM. Before an investor goes to invest in a country, he needs to have information about the country. Haven't you ever heard that Information is power? I guess, you are ignorant about credit rating agencies, so i am not going to have this discussion with you.