The Federal Government has expressed surprise over last week’s report of an international rating agency, Moody’s Investors Service, which downgraded nine Nigerian banks following its downward review of the Nigeria’s rating.
The Minister of Finance, Budget and National Planning, Hajiya Zainab Ahmed, reacted to the report Thursday at 65th ministerial briefing organised by the Presidential Communications Team in the State House, Abuja.
The downgraded banks included Access Bank Plc, Fidelity Bank Plc, First City Monument Bank Limited, First Bank of Nigeria Limited, Guaranty Trust Bank Limited, Sterling Bank Plc., Union Bank of Nigeria Plc., United Bank for Africa Plc. and Zenith Bank Plc.
The rating agency also downgraded to Caa1 from B3 the long-term deposit ratings and issuer to revenue ratio is high. And even though their assessment is that we have been able to pay off our debts in ratings, as well as the senior unsecured debt ratings (where applicable), of all the nine lenders.
While reacting to the report, Hajiya Zainab said Moody’s report did not reflect a proper understanding of the domestic economy despite presenting evidence of its efforts to stabilise the economy.
She said: “The Moody’s report downgrade, it came as a surprise to us because we have presented all of the work that we have been doing to stabilise the economy.
“But these are external rating agencies that do not have the full understanding of what is happening in our domestic environment. The reasons they gave also are very practical ones. They said even though oil production has been restored, that there is still a chance, a higher risk that there could be a relapse to the production levels.
“Second, they also said that they are concerned that our debt service medium term, they have confirmed that we have the capacity to pay our debt, but that it is eating too much of our revenue and they flagged that as a high risk.”
The finance minister said Moody’s inferred that Nigeria’s foreign exchange management was still problematic by stating that industries operating in the country could not get the foreign exchange requirements to meet the business needs.
She, however, said the federal government looked forward to the S&P global report to be released on Friday.