Fitch Revises Lagos' Outlook to Negative; Affirms 'B+' Rating

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Fitch Ratings has revised Lagos State’s outlook to negative from stable. But the rating agency affirmed the state’s Long-term foreign and local currency issuer default ratings (IDRs) at ‘B+’.

The issue ratings on Lagos’ senior unsecured bonds was also affirmed at ‘B+/AA+(nga)’. The state’s National Long-Term Rating was also affirmed ‘AA+(nga)’, with Stable Outlook.

Under EU credit rating agency (CRA) regulation, the publication of local and regional government (LRG) reviews is subject to restrictions and must take place according to a published schedule, except where it is necessary for CRAs to deviate from this in order to comply with their legal obligations.

“Fitch interprets this provision as allowing us to publish a rating review in situations where there is a material change in the creditworthiness of the issuer that we believe makes it inappropriate for us to wait until the next scheduled review date to update the rating or Outlook/Watch status. The next scheduled review date for Fitch’s ratings on Lagos State was originally 24 February 2017.

“However, following the downgrade of Nigeria’s Outlooks we have taken a similar rating action on Lagos State as the issuer is rated at the same level as the sovereign for the Long-Term Foreign and Local Currency IDRs. Fitch projects that Lagos will report budgetary performance and debt metrics that are commensurate with its current ratings. The rating action on Lagos follows the same on Nigeria’s Outlook on 25 January 2017,” it explained.