Nigeria's rating outlook downgraded from "Stable" to "Negative"
Fitch Ratings Incorporated (Fitch) has today affirmed Nigeria's BB- rating, but revised Nigeria's credit rating outlook to "Negative". This decision comes barely a week after another rating agency, Standard & Poor's (S&P), reduced Nigeria's credit rating by one notch from BB- to B+.

The review was initially scheduled to be published on 27th of March, 2015, but the ratings agency decided to wait till after the elections to publish its review. The ratings agency noted that violence was very limited on election day and challenges were largely technical in nature.

Medium political risk, erosion of fiscal and external buffers pinpointed for outlook revision
In the statement released by the ratings agency, the revision of Nigeria's outlook was warranted by political and financial issues. According to Fitch, Nigeria's political risk has been heightened in the context of a tightly contested presidential election and potential transition issues.

The ratings agency is wary about the decline in Nigeria's Excess Crude Account, which is Nigeria's key fiscal buffer, and does not expect savings to be rebuilt significantly by the end of 2016. Fitch also forecasts that the current account will fall into deficit in 2015 for the first time since 1998, owing to the decline in oil prices.

Further ratings downgrade possible
Fitch further warns that a serious prolonged breakdown in public order, continued erosion of fiscal and external buffers, and a reversal of key structural reforms in the polity could lead to a rating downgrade in September when its next review is scheduled.

On the other hand, a smooth electoral process, strengthened buffers, and containment of fiscal pressures could prompt a return to a "Stable" outlook.

The ratings agency is wary about the decline in Nigeria's Excess Crude Account, which is Nigeria's key fiscal buffer, and does not expect savings to be rebuilt significantly by the end of 2016.