The credit rating of Fidelity Bank Plc has been placed on DOWNGRADE by Moody’s Investors Service over alleged liquidity squeeze arising from Nigeria’s unstable forex earnings, allocation and day-to-day operations. The ugly situation also extends to the asset quality of Fidelity Bank Plc.
The Report by Moody’s states:
“Constraints on domestic oil production, capital outflows, and the increased cost of the country’s imported refined petroleum products, coupled with US dollar strengthening, have together weighed on the availability of foreign currency liquidity in the country despite higher oil prices and material discrepancies between official and parallel market exchange rates persist in the country.”
“Nigeria’s foreign exchange reserves have declined to $38 billion as of September 2022 from $40 billion as of January 2022 despite higher oil prices, and we understand that the central bank, which is the main provider of foreign exchange in the country, has consequently scaled down and become increasingly selective with its foreign currency allocations.”
The credit rating agency alleges that the existing market condition makes it particularly risky and difficult for Fidelity Bank to meet its medium and long-term forex loan obligations.
