“Political uncertainty is heightened in the context of a tightly contested presidential election and potential transition issues,” Fitch said in a statement. “Fiscal and external buffers have been eroded significantly as Nigeria enters a period of lower oil prices.”
Nigerians are awaiting the release of official results from the vote, with tensions mounting in the key oil-producing Rivers state where the main opposition party alleged the vote was rigged. The poll, the closest since the West African country ended army rule in 1999, pits President Goodluck Jonathan, a 57- year-old Christian from the oil-rich Niger River delta, against a united opposition led by former military dictator Muhammadu Buhari, a 72-year-old northern Muslim who lost four years ago.
The timing of the Fitch announcement was “very interesting given that it’s right in the middle of the election, even before the results are announced,” Ridle Markus, Africa strategist at Barclays Plc’s African unit, said by phone from Johannesburg. “At the same time we do know Nigeria has a lot of challenges.”
The election is testing the stability of a country with an almost $500 billion economy that’s been hit by a more than 50 percent drop since June in prices for oil, its main export, and a weakening currency. Nigeria, which pumped almost 2 million barrels a day last month, relies on crude for two-thirds of government revenue and 90 percent of its export income.
Fitch delayed its decision from March 27 because of the election, it said. “Violence was very limited on election day and challenges were largely technical in nature,” the ratings company said. At least 43 people were killed in violent incidents on Saturday, according to provisional data from the Situation Room, a coalition of civil-society groups monitoring the ballot.
Economic growth will probably be 4.8 percent this year, half the average rate of the past 15 years, according the International Monetary Fund.
The naira has fallen 18 percent in the past six months, the most among 24 currencies on the continent tracked by Bloomberg. Inflation will average 12.4 percent in 2015, up from 8.4 percent in February, Oyin Anubi and Turker Hamzaoglu, economists at Bank of America Merrill Lynch, said in a note on March 25.
Yields on Nigeria’s $500 million of Eurobonds due July 2023 rose one basis point to 6.51 percent.
©2015 Bloomberg News