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•As stock market investors gain N1.1trn in January
By Chinwendu Obienyi
After recording a significant fall on Monday, Nigeria’s sovereign dollar-denominated bonds dropped sharply for a second day in a row amid Moody’s downgrade of its long-term foreign-currency and local-currency issuer ratings.
Despite this downgrade, the country’s stock market closed the month of January on a positive note as market capitalization of the Nigerian Exchange Limited (NGX) grew by N1.08 trillion to close at N28.997 trillion from an opening figure of N27.915 trillion.
Moody’s Investors Service had on Friday, downgraded Nigeria’s sovereign credit rating further to ‘Caa1’ from ‘B3’ and changed the outlook to ‘Stable’ with analysts stating that the obligations rated ‘Caa1’ are judged to be of poor standing and are subject to very high credit risk.
According to Cordros Research, this rating comes just three months after the rating agency downgraded the country’s credit rating to ‘B3’ on 21 October 2022 primarily due to the significant deterioration in the country’s fiscal and external position, exerting increasing pressure on the sovereign credit profile despite a substantial increase in international crude oil prices in 2022. “Overall, the ‘Caa1’ rating is the lowest Nigeria has attained since 2006 (when rating agencies commenced coverage of Nigeria) and places the country under the same rating category as Gabon, Iraq, Pakistan, and Tunisia”, they said. Longer-dated maturities were again the biggest losers, with the 2049 Eurobond falling more than 2.2 cents to 75.344 cents in the dollar, according to Tradeweb data XS1910828182=TE. Also, Nigeria’s foreign exchange reserves fell slightly to $37.04 billion on January 27, 2023 from $37.08 billion on December 30, 2022.
The downgrade did not affect the mood of investors trading at the floor of the NGX as its All Share Index (ASI) grew by 1.05 per cent in two trading sessions due to price appreciation in the shares of Geregu and AccessCorp.
Having started the year on a positive note, investors’ wealth grew by N895 billion as year-to-date of the market closed the month of January at 3.88 per cent. Daily Sun analysis revealed that the ASI- the average value of share prices of all companies, closed at 53,238.67 points from an opening figure of 51,251.06 points.
Further analysis also revealed that market capitalization which opened at N27.915 trillion, increased by N1.08 trillion to close the month under review at N28.997 trillion.
