S&P Global Ratings recently upgraded Nigeria's long-term foreign currency credit rating from 'B-' to 'B', assigning a Stable Outlook. This upgrade signifies a positive shift in Nigeria's creditworthiness, marking the first such improvement in 14 years from S&P and completing a sweep of positive rating actions from all three major global credit agencies within approximately 12 months. Fitch Ratings and Moody’s also issued upgrades in 2025, reinforcing international confidence in Nigeria's economic trajectory.
The credit assessor cited several key factors for the upgrade, including improvements in Nigeria’s external position and stronger balance of payments dynamics. Increased oil production, expanding domestic refining and export capacity, and the liberalisation of the foreign exchange market were highlighted as primary drivers. S&P projected Nigeria's current account surplus to rise to 5.8% of GDP in 2026 from 4.8% in 2025, and forecasted inflation to average 17.7% in 2026 before declining below 10% by 2028.
The upgrade also reflects the impact of ongoing macroeconomic reforms, particularly the liberalization of the foreign exchange market and the government's decision not to reintroduce fuel subsidies. These measures have helped prevent wider budget deficits and preserved foreign exchange liquidity. Furthermore, reforms aimed at broadening the tax base, improving public revenue mobilization, enhancing fiscal transparency, and strengthening debt sustainability were recognized. Nigeria’s debt-to-revenue ratio has significantly improved since 2023 and is projected to decline further, from about 500% in 2023 to 338% in 2026.
Finance Minister Taiwo Oyedele welcomed the upgrade, stating it sends a strong signal to global investors, development partners, financial markets, and the international business community that Nigeria is regaining macroeconomic credibility and restoring confidence in its economic management. This improved rating is expected to narrow the risk premium investors demand on Nigerian Eurobonds and could reduce the cost of future external borrowing, enhancing Nigeria's access to international capital markets.
In a related development, S&P Dow Jones Indices has placed Nigeria on its 2027 watchlist for a potential reclassification to a "Frontier" market from its current "Standalone" status. This reclassification, if approved, could increase passive investment flows into Nigerian equities and improve the country's visibility among global institutional investors, further bolstering confidence in Nigeria’s capital market reforms.
