Nigeria Sovereign Credit Strategy: More Upgrades Likely Post Election

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Nigeria Sovereign Credit Strategy: More Upgrades Likely Post Election

Idea

May 18, 2026 06:30 PM GMT

Morgan Stanley & Co. International plc+MNigeria Sovereign Credit Strategy | EEMEA Neville Z Mandimika

Strategist

More Upgrades Likely Post Neville.Mandimika@morganstanley.com +44 20 7425-2509

Election

S&P upgraded Nigeria to B, aligning with Fitch, while improving

oil revenues and reform momentum continue to support the

macro story. We remain bullish as external buffers and reserves

could outperform, favouring long-end particularly the 2046s,

while preferring local OMOs on an unhedged FX basis.

Fitch and S&P are now aligned: Friday’s upgrade by S&P to B (stable outlook) from

B- was largely driven by higher oil revenues, supported by both stronger volumes

and prices, as well as the three-year reform cycle the country has undergone. The

move now brings S&P and Fitch into alignment, while Moody’s continues to lag at

B3. However, Moody’s stable outlook suggests that any eventual alignment is likely

to come only after the January 2027 elections. The next Moody’s review is

scheduled for 28 August, when a positive outlook revision is possible.

That said, this remains heavily dependent on two key factors: first, the absence of

any rollback in FX and fiscal reform momentum in the run-up to the elections; and

second, continued improvement in oil revenues. If both conditions hold, a ratings

upgrade could plausibly follow in February 2027, assuming a six-month review cycle.

This timing would also come shortly after the elections, when there may be early

indications of the scale of election-related spending and any resulting fiscal scarring.

However, when we compare Moody’s ratings across EM sovereigns where Fitch and