JP Morgan Says Nigeria Could Save $170m Yearly if Rating Improves

Nigeria could save $170 million annually in eurobond servicing costs if it achieves a one-percent improvement in its sovereign credit rating, Dapo Olagunju, managing director and head of West Africa at J.P. Morgan Chase & Co, has said.

Speaking at a Fitch Ratings event in Lagos on Tuesday, Olagunju cited a media report that revealed that the country had spent nearly $3 billion servicing eurobonds under the President Bola Tinubu administration.

“The most effective way to reduce this burden is by improving the country’s credit rating. A one-notch upgrade typically lowers borrowing costs by about one percent. With Nigeria holding roughly $17 billion in outstanding eurobonds, a one-percent reduction in financing costs translates to about $170 million in annual savings—money that could be deployed for more productive investments. This is why focusing on credit ratings is critical,” he said.

Olagunju said improvements in sovereign credit ratings often trigger stronger investor appetite for corporate issuers, citing recent examples in Egypt and Côte d’Ivoire. “The more foreign investors a country attracts, the deeper its markets become—and the better its ratings tend to get,” he added.

His remarks came a few days after S&P Global Ratings revised Nigeria’s outlook to positive from stable, while affirming its long- and short-term ratings at B-/B. In May, Moody’s Ratings upgraded Nigeria one notch to B3 from Caa1, highlighting a strengthening fiscal and external position. Fitch, meanwhile, has maintained Nigeria at B with a Stable outlook, stressing the need for continued reforms.

“For a country like Nigeria, credible ratings are not cosmetic — they are the connective tissue between our ambitions and the global balance sheet,” Olagunju said. “Capital is always searching for a home, and a strong credit rating determines whether a country has genuine access to global capital.”

According to JPMorgan, strong ratings enable clearer price discovery, ensure transparent risk pricing, broaden investor participation, and enforce financial discipline by compelling issuers to strengthen governance and disclosures.

“A credit rating is not just a score; it is a translation of confidence. It distills complex economic realities into clear signals that investors anywhere in the world can interpret within seconds,” Olagunju added.

The US investment bank also highlighted the resilience of Nigeria’s financial institutions, noting that the sector continues to attract interest from global investors despite operating under some of the world’s most stringent liquidity requirements.

“Few countries operate with a cash reserve ratio as high as 50 percent. Yet, capital adequacy remains strong, profitability is robust, and risk management continues to evolve. These are not minor achievements. In my interactions with investors, the consensus is clear: Nigeria’s financial institutions know how to manage adversity,” it said.

Nigeria urged to improve transparency and deepen local expertise

The JP Morgan executive warned that global investors are deterred not by risk itself but by inadequate information.  “Investors are not afraid of risks but are deterred by opacity. The less transparent a system and its disclosures are, the more hesitant investors will be,” he said.

“As banks and financial market participants, we are in the business of managing risks, not avoiding them. But risk management relies on information—if investors cannot access sufficient data, they will shy away or demand exceptionally high returns. This underscores the need to improve transparency and disclosure across our markets.”

He urged Nigeria to deepen local expertise in credit analysis and risk management by partnering with global institutions and rating agencies. Olagunju also stressed the importance of broadening the investor base. “Pensions, insurers, and mutual funds must be encouraged to provide anchor capital for long-term financing,” he said.

Looking ahead, JPMorgan maintained a cautiously optimistic outlook. If current reforms continue, inflation moderates, and foreign exchange stability improves, Nigeria could see its sovereign rating upgraded in upcoming review cycles.

“This would translate into tighter corporate spreads, greater portfolio inflows, and increased liquidity in both primary and secondary markets,” Olagunju said.