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S&P Global sees positive signs in Nigeria and Kenya

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Nigeria is a country that S&P is now watching closely

Nigeria and Kenya have both had positive economic policy developments in the last couple of months, one of S&P Global’s top sovereign rating analysts said, adding that South Africa was a slow-moving story of steadily rising debt to GDP.

Nigeria is a country that S&P is now “watching closely”, Frank Gill, one of the ratings agency’s top sovereign analysts said at the firm’s emerging market conference in London.

“It’s on a negative outlook, but we are seeing some positive signs there,” he said, highlighting the government’s recent cuts to fuel subsidies and moves to drastically simplify and unify the country’s various foreign exchange rates.

In February, S&P had affirmed Nigeria’s credit rating at ‘B-/B’ but changed its outlook to ‘negative’ – akin to a downgrade warning – citing increasing risks over debt servicing capacity for the one-to-two years. Gill did not elaborate whether S&P was looking to revise its outlook in its next review of Nigeria on August 4.

Gill also noted positive developments in Kenya, where the government had been able to pre-finance a redemption due in 2024 through a syndicated loan and money from multilateral institutions.

“We don’t think Kenya is going to restructure their debt,” he said.

Asked whether South Africa was likely to be downgraded in the next 12 months, Gill said: “I don’t think it’s a fast-moving credit story.”

He added, however: “We are projecting that debt to GDP continues to climb, so there are long-term concerns.”

In March, S&P downgraded its outlook on South Africa to ‘stable’ from ‘positive’, citing infrastructure constraints and a severe power crisis, though it confirmed the country’s ‘BB-/B’ foreign currency sovereign credit rating.