Nigerian government bonds fell sharply on Monday after ratings agency Moody’s cut the country’s credit rating to junk and the lowest level on record.

Longer-term maturities fell the most, with the dollar-denominated 2051 Eurobond falling more than 2.6 cents to 68.892 cents on the dollar. The Eurobond was issued at 100 cents on the dollar in September 2021. The bonds have struggled since last year despite rising oil prices due to the oil producer’s tough fiscal challenges.

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The renewed liquidation of Eurobonds follows a scathing downgrade of Moody’s credit rating to Caa1 from B3, which is on par with Pakistan and just one notch above the ratings of Ghana and Mozambique, considered in debt trouble.

The downgrade, to which investors are now reacting by dumping Eurobonds, was driven by Moody’s expectations that

the government’s fiscal and debt position will continue to deteriorate.

“Immediate default risk is low, assuming there are no sudden and unexpected events, such as another shock or a change in policy direction,” Moody’s said.

Details later…