OREANDA-NEWS. Fitch Ratings has revised the Outlook on the Nigerian State of Rivers' Long-term foreign currency Issuer Default Rating (IDR) to Negative from Stable. The agency has also the affirmed Long-term foreign and local currency IDRs at 'BB-' and its National Long-term rating at 'AA-(nga)'. The Outlooks on the local currency IDR and on the National Long-term rating remain Stable.

Under EU credit rating agency (CRA) regulation, the publication of local and regional government (LRG) reviews is subject to restrictions and must take place according to a published schedule, except where it is necessary for CRAs to deviate from this in order to comply with their legal obligations. Fitch interprets this provision as allowing us to publish a rating review in situations where there is a material change in the creditworthiness of the issuer that we believe makes it inappropriate for us to wait until the next scheduled review date to update the rating or Outlook/Watch status.

The next scheduled review date for Fitch's ratings on Rivers State was originally 11 September 2015. However, following the downgrade of Nigeria's Outlooks we have taken a similar rating action on Rivers State as the issuer is rated at the same level as the sovereign for the Long-term foreign currency IDR.

KEY RATING DRIVERS

The rating action on Rivers State follows the same on Nigeria's sovereign Long-term IDR's Outlook on 30 March (see ' Fitch Affirms Nigeria at 'BB-'; Outlook Revised to Negative ' at www.fitchratings.com).

The rating action reflects the application of Fitch's 'International Local and Regional Governments Rating Criteria - Outside United States', according to which subnationals' ratings usually cannot be higher than their sovereign.

RATING SENSITIVITIES

The ratings could be downgraded if the operating margin declines below 50% amid a resurgence of restiveness in the Niger Delta region while financial debt rises beyond Fitch's projections. Also, a downgrade of the sovereign would prompt a similar action on the ratings of the state, in accordance with our criteria that subnationals' ratings usually cannot be higher than their sovereign's.

Conversely, the Outlook could be revised to Stable if internally generated revenue rises above Fitch's expectations, coupled with convergence of the state's accounting principles with international standards, and provided that the Outlook on the sovereign is also revised to Stable.