Moody’s Downgrades Protest-Hit Lebanon

Moody's Predicts 2.5% GDP Growth For Nigeria


Moody’s ratings agency on Tuesday downgraded Lebanon’s sovereign debt, saying sweeping anti-government protests had hit investor confidence and threatened marco-economic stability.

“The downgrade to Caa2 (from Caa1) reflects the increased likelihood of a debt rescheduling or (other measures) that may constitute a default,” it said.

The agency had already flagged three months ago that it was considering downgrading the country’s debt.

Since then, it said Tuesday, “Lebanon’s economic, social and political crisis has further intensified”, threatening to drag growth below zero and “further stoking social discontent”.

“Widespread social protests, the resignation of the government and loss of investor confidence have further undermined Lebanon’s traditional funding model,” it said.

That threatens the viability of the Lebanese pound’s peg to the US dollar and the country’s macroeconomic stability, it said.

Nationwide street rallies have gripped Lebanon since October 17, demanding a complete overhaul of a political system deemed inefficient and corrupt.

The movement forced the government to resign last week and has left much of Lebanon in lockdown, with protesters blocking major roads.

Even before the protests launched on October 17, growth in Lebanon had plummeted in the wake of repeated political deadlocks in recent years, compounded by the war in Syria.

Public debt stood at more than $86 billion, or higher than 150 percent of GDP, according to the finance ministry.

In August, Fitch bumped Lebanon down to “CCC”, while Standard & Poor’s kept it at “B-/B” with a negative outlook.

Moody’s To Pay $16m Over Flawed Credit Ratings

Moody's Predicts 2.5% GDP Growth For Nigeria



Ratings agency Moody’s has agreed to pay more than $16 million to resolve charges tied to its assessment of residential mortgage-backed securities worth tens of billions of dollars, market regulators announced Tuesday.

The case also involved the first charges brought by the Securities and Exchange Commission involving deficient ratings symbols.

It comes nearly 10 years after the global financial crisis, in which the improper rating of such securities played a starring role.

According to the SEC, Moody’s failed to establish and enforce proper internal controls for models used to rate mortgage backed securities between 2010 and 2013.

As a result, the agency, one of the largest in the United States, corrected more than 650 ratings of mortgage-backed securities valued at more than $49 billion, according to the SEC.

In 54 cases, Moody’s rated securities differently than its own models suggested it should but kept no record of its reasons for doing so, the commission said.

The agency also issued 26 ratings of securities called “combo notes” valued at about $2 billion in a manner the SEC said was inconsistent with ratings of other securities using the same ratings symbols.

“As our order notes, the SEC put Moody’s on notice about its internal controls obligations yet it did not develop an effective process to ensure the accuracy of the models it relied upon when rating residential mortgage-backed securities,” Antonia Chion, the SEC’s associate director of enforcement, said in a statement.

Moody’s neither admitted nor denied wrongdoing.

Investors rely on such ratings to assess the creditworthiness of loans backing some derivative securities.

A congressionally mandated inquiry in 2011 said that ratings agencies had played an “essential” role in fomenting the 2008 financial meltdown on Wall Street — and accused Moody’s in particular of internal “breakdowns” in which the company systematically gave its highest rating to toxic assets that later crashed

Moody’s Says Growth In Sub-Saharan Africa To Accelerate To 3.5% In 2018

Moody's Predicts 2.5% GDP Growth For Nigeria

Sub-Saharan Africa has received a “negative outlook” for 2018 from one of the world’s top rating agencies, Moody’s Investor Services.

In a report released on Monday, Moody’s says the negative outlook reflects the region’s subdued growth recovery, fiscal challenges and higher political risks.

Although Moody’s sees higher and more stable global growth in the New Year, it says Africa will get limited benefits of that because commodity prices are still low, in addition to domestic structural bottlenecks.

The agency, however, notes that regional GDP growth is expected to move up slightly to 3.5 per cent in 2018 with high currency and refinancing risks.

Moody’s rating overview shows nine out of 20 sub-Saharan sovereigns in “negative outlook” as at January 18, 2018.

Nigeria’ll Not Recover From Foreign Currency Shortage Soon – Moody’s

Moody's Predicts 2.5% GDP Growth For NigeriaMoody’s Investors Service says it may take a while for Nigeria and other sub-Saharan countries to recover from the foreign currency shortage at the forex market.

In a report titled, Foreign Currency Shortages are Subsiding But Will Take Time To Overcome, the agency said although foreign currency shortages in Nigeria and other sub-Saharan African countries are easing, it will take time for the sovereigns, banks and non-financial companies to restore their financial health.

The credit rating agency attributed the dollar shortages to lower oil and commodity prices which had hit the finances of countries in the sub-region.

Also according to the report, banks in Angola, Nigeria and the Democratic Republic of Congo remain the most affected by foreign currency shortages due to their economy’s high reliance on dollars.

Moody’s expects these challenges to continue in 2017 but ease in 2018.

Moody’s Predicts 2.5% GDP Growth For Nigeria

Moody's Predicts 2.5% GDP Growth For NigeriaOne of the world’s leading credit rating agencies, Moody’s Investor Services, has predicted a 2.5 per cent GDP growth for Nigeria in the new year 2017.

The agency’s Vice President and lead analyst for Nigeria, Lucie Villa, told Sunday Punch, that Nigeria’s economy would bounce back this year, supported by on ongoing recovery in oil production.

The rating agency’s chief said: “the government’s balance sheet is strong, with debt at around 16.6 per cent of Gross Domestic Product in 2016.

“Also, despite its interest burden rising to 19.8 per cent of revenue, Nigeria’s capital markets remain a reliable and captive source of liquidity and funding for the government.”

Moody’s, however, said Nigeria’s weak institutional framework, especially in terms of “the rule of law, government effectiveness and control of corruption,” would have a significant impact on its economic growth and fiscal strength, and thereby constrain the country’s b1 rating.

Corruption Is Hindering Upgrade Of Nigeria’s Credit Rating – Moody’s

Moody’s investors service has raised concerns that Nigeria’s slow implementation of structural economic reforms is limiting the country’s chances of a credit-rating upgrade.

According to a statement released by the international rating agency, Nigeria’s economic growth is described as “resilient,” but it notes that any chance of an update from its BA3 rating, which is three levels below investment grade, is being hindered by corruption, weak institutions and vulnerability to oil price drops.

Analysts at Moody’s believe that Nigeria’s momentum for addressing challenging structural reforms has slowed, “most critical of which is the Petroleum Industry Bill said to be holding up significant foreign investment.”

Nigeria’s economy expanded an estimated 6.6 percent in the first quarter of the year, compared with 6.9 percent in the previous three months.

Nigeria’s Rating At Risk If $1.3billion Loan is blocked, NNPC Warns

The Nigerian National Petroleum Corp (NNPC) has told lawmakers at the National Assembly that any move to block its deals to finance payment of $3.5 billion owed to fuel traders could expose the country’s economy to a sovereign credit downgrade or a banking crisis.

Major oil trading houses including Vitol, Glencore, Trafigura and Mercuria are owed millions of dollars by Nigeria for fuel deliveries, according to a government-commissioned report released last year.

The report showed that Glencore was owed $138 million, Vitol $198 million and Trafigura $53 million.

NNPC accumulated the debts to traders, some of which are three years old, due to non-payment of fuel subsidies by the government, the head of the company told parliament.

But NNPC has explained that the financial facility it is seeking is not a loan warning that “the exposure of domestic banks is about $1.5 billion, and a default of this magnitude of exposure could lead to another round of banking crisis,” NNPC said in a statement.

NNPC’s Group Managing Director; Andrew Yakubu stated that “the continued delay has dire consequences ranging from a major negative impact on the sovereign credit rating to costly litigation against the federal government in foreign courts,” it added.

The House of Representatives committee asked to see NNPC’s documents and said it would investigate.

According to Reuters News agency, the Ministry of Finance Ministry did not respond to calls for comment as well as Trafigura, Mercuria, Vitol and Glencore all declined comment.

Engineer Yakubu also explained to the lawmakers that NNPC was borrowing $1.56 billion through a special purpose vehicle to offset part of the fuel import debts and that it had allocated 15,000 barrels per day of oil output for a period of up to five years to pay back the money, the company said in a statement.

Engineer Yakubu said the company planned to settle the remaining debts through a second such forward sales arrangement as well as internal resources.

Lawmakers have questioned the fund-raising deal, saying NNPC is not allowed to take out loans under rules set out in the constitution.

Standard Chartered, which managed the banking deal, also reportedly declined official comment.

Credit rating

Credit rating agency Standard and Poor’s upgraded Nigeria in November, citing improved financial stability and optimism over banking and electricity reforms.

Its ratings from the three major agencies are still in junk territory, however, at BB- from S&P and Fitch and Ba3 from Moody’s.

Nigeria’s banking crisis ended with a sharp recovery in bank earnings last year after a 2009 credit crisis led to the near collapse of nine lenders.

President Goodluck Jonathan attempted to end fuel subsidies a year ago but backed down after it sparked widespread protests.

Decades of mismanagement and corruption have left NNPC heavily indebted, several audits have shown.

Trading companies have been battling for months to recoup the money, and some have stopped supplying Nigeria with fuel. Most have remained in the West African country, however, partly because of the huge opportunities it presents in the trading of crude oil.