Fitch Ratings, a reputable international capital company, has reduced the rank of Dangote Industries Limited(DIL) from AA(nga) to B+(nga), citing concerns over the conglomerate’s creditworthiness compounded by Nigeria’s “corporate governance.”

“The downgrade reflects significant deterioration in the group’s liquidity position following lower-than-expected disposal proceeds,” Fitch said in the report released on Monday, adding that Dangote Industries has been placed on Rating Watch Negative (RWN).

“The group has senior secured debt raised at subsidiary levels amounting to USD2.7 billion at end-2023 representing 49% of total group debt,” Fitch said in the report, which also highlighted the blow that naira devaluation dealt Dangote’s enormous dollar-denominated debt. “We do not expect a positive rating action until the company’s liquidity position improves substantially.”

The international rating agency said that Dangote Industries had “immediate debt servicing requirements related to the syndicated loan raised to finance the construction of Dangote Oil Refining Company (DORC)” in Lagos.

Fitch said any further delay in meeting funding requirements would increase Dangote’s chances of defaulting “and lead to further rating downgrade.”

The Fitch report indicated that Dangote Industries recorded a significant loss in the trillions following Nigeria’s naira devaluation, which caused a “mismatch between USD-denominated debt and domestic revenues.” 

Specifically, the Nigerian conglomerate suffered a N2.7 trillion in 2023.

Fitch Ratings projected the naira devaluation to continue at a higher rate, which could further push Dangote Industries Ltd down the ranks. 

The report said the Dangote refinery underperformed at 50 per cent capacity in the first half of 2024, churning out 325,000 bpd to 375,000 bpd instead of its 650,000 bpd target of refined crude products.

In recent weeks, Dangote Industries Ltd had had its share of run-ins with the Nigerian government over allegations of the attempted monopoly of the oil and gas sector made by oil regulator chief Farouk Ahmed of NMDPRA.

There were also claims that the sulphur content of the refined crude products from Dangote Refinery was inferior to that of its imported equivalents, claims that the oil mogul himself refuted vehemently.