ABUJA: Standard & Poor's upgraded Nigeria's credit rating yesterday because of improved financial stability and optimism over reforms to the banking and electricity sectors.
Nigeria is among the world's top 10 crude oil exporters and a key supplier to the United States, China and India. It is Africa's second-largest economy after South Africa.
The ratings agency raised its long-term foreign and local currency sovereign credit rating to BB- with a stable outlook, three notches below investment grade, from B+. This brings its view in line with Fitch's rating.
Fellow ratings agency Moody's expanded its coverage to include Nigeria on Wednesday, assigning a Ba3 rating with a stable outlook.
Moody's said it also expanded its coverage to Kenya and Zambia.
"(Nigeria's) external reserve buffers have ... been strengthening on the back of high oil prices and strong exports," Standard and Poor's said in a statement.
"The government has sustained reform momentum in several key areas, including cutting the fuel subsidy and reforming the power sector, and the authorities have restructured and strengthened the previously troubled banking sector."
Nigeria's foreign exchange reserves have risen to around $ 42 billion, up from around $ 33 billion at the start of the year.
The Excess Crude Account (ECA), where it saves money it earns from oil exports over a benchmark prices, contains around $ 8.4 billion, compared with $ 2 billion at the end of 2010.
"I think it's justified and actually long overdue," said Stuart Culverhouse, head of research at Exotix.
"I don't have big concerns about debt or fiscal sustainability so the higher rating, which brings it into line with Fitch, is deserved."