By Dimitra DeFotis

Just weeks after Nigeria’s local-currency bonds were axed from the main emerging market debt index, Citi Research suggests buying them.


Ciri Research
A comparison of commodity producers debt and deficits, including Nigeria. (Larger image available.)
Citi emerging market strategists Luis E. Costa and Nivedita Sunil write that they are going long Nigeria 6 3/8 07/12/2023 versus the 10-year Treasury:

“The markets have penalized Nigerian sovereign credit curve due to 1) the obvious exposure to oil; and 2) the government’s unwillingness to devalue the naira again, and the natural fiscal implications. Despite the fiscal and current account gaps following the drop in oil revenues, Nigeria still has a decent cushion to finance its fiscal shortfall, probably via an increase of debt.

Given the prospects of some structural reform under the new government [of President Muhammadu] Buhari, we believe it is still fair to imagine a slightly better macro picture in 2016/2017 under more stable oil price dynamics. On the Nigerian naira (NGN) front, we believe the markets cannot fully discard the possibility of another wave of NGN devaluation over the next months, despite dubious statements by central bank officials.”

http://blogs.barrons.com/emergingmarketsdaily/2015/10/09/citi-says-ignore-oil-buy-nigeria-government-debt/?mod=yahoobarrons&ru=yahoo