Moody’s Ratings (Moody’s) has affirmed the Caa1 rating of Dangote Sugar Refinery Plc (DSR) and upgraded its outlook from positive to stable.
Moody’s has also changed its national scale rating (NSR) from Baa3.ng to Ba1.ng.
Dangote Sugar Refinery is the largest sub-Saharan African sugar producer and refiner-based. The global rating agency attributed the change to the negative impact of the naira devaluation on the operations of DSR.
The rating agency in a statement said: “The affirmation of DSR’s Caa1 CFR and change in outlook to stable with the repositioning of the NSR to Ba1.ng reflects Moody’s view that the company’s raw material import business model continues to be negatively affected by the sharp devaluation of Nigeria’s currency, against dollar during the last 12 months.
“The currency devaluation has deteriorated DSR’s liquidity position and materially increased its letters of credit (LoC) in naira terms, weakening the company’s credit profile…
“The stable outlook reflects our expectation that DSR’s volumes will grow towards the levels achieved in 2022 over the next 18 months. The stable outlook also assumes that the company’s outstanding letters of credit with banks will be rolled over and not increase in size.”
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