Business
Lagos retains Fitch B+ outlook in 2016 despite recession
An international rating agency, Fitch Ratings, has stated that Lagos State’s long-term foreign and local currency Issuer Default Ratings (IDRs) outlook for 2016 was retained at B+, which the state also recorded in 2015, despite Nigeria’s recession.
But Lagos, which Fitch Ratings uses as a benchmark for assessing Nigeria as a country on its index performance in attraction of foreign and local currency as investment inflow, says it does so because Lagos is being viewed as the economic hub of Nigeria.
It concluded that the state recorded negative outlook on short-term foreign currency IDR at ‘B’ in 2016, compared with its B+ in the previous year.
The ratings on the state’s unsecured bonds have also been affirmed at ‘B+’ which reflected its weak socio-economic indicators by international standards.
Read also: SEC lifts suspension on Heritage Capital Markets
In its annual report released on Friday, Fitch assessment team said they had “expectations of resilient operating performance in the medium term, adequate transparency compared with national standards and satisfactory debt metrics.
“Lagos benefits from a diversified revenue structure, and especially from strong internally generated revenues (IGR), which support an operating margin of around 50 per cent over the medium term. ”
They said the administration’s commitment to keep cost growth under double-digit inflation, was aimed at reducing pressure from potential decline in oil-driven economy, which affected the statutory allocations from the Federal Accounts Allocation Committee (FAAC).
Mostly focused on public services, including transportation, water, health, education and social protection.
On debt and liquidity, the report says Lagos’ debt will grow over the medium term up to N1 trillion despite over 150 per centre tax revenues, though negative outlook-instability was caused by naira exchange devaluation.
Fitch expects debt sustainability to remain adequate, with a pay-back (debt-to-current balance) ratio of around three years, given Lagos limited reliance on oil-related activities, but with social-economic indicators to improve forecast on local GDP growth .
RipplesNigeria ….without borders, without fears
Click here to download the Ripples Nigeria App for latest updates
Join the conversation
Support Ripples Nigeria, hold up solutions journalism
Balanced, fearless journalism driven by data comes at huge financial costs.
As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.
If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.
Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.
INVESTIGATION: In Kwara, multimillion-naira milk processing plant is abandoned, converted to a chicken outlet
After the government spent millions of naira to establish a milk processing plant in Kwara State that would provided jobs...
SPECIAL REPORT: For Sokoto communities, promise of healthcare is akin to death sentence
In this story, ABDULRASHEED HAMMAD delves into the dire realities of Primary Health Care services in Sokoto State, shedding light...
ICYMI…SPECIAL REPORT: NNPCL hides behind PIA to frustrate disclosure, accountability
Nigeria’s major oil company, Nigerian National Petroleum Corporation Limited (NNPCL), in what appears to be a common practice of disregard...
INVESTIGATION: Multi-million naira Ekiti resort center remains uncompleted a decade after
The multimillion-naira project, expected to comprise recreational buildings, now consists of cassava farmland, a bush used for excretion, and a...
SPECIAL REPORT: Torturous experiences of students with disabilities in Oyo tertiary institutions
For students with disabilities in Oyo state-owned tertiary institutions, learning is a torturous and distressing experience, considering the building structures...