Most analysts agree that a Nigerian bond default is a question of
when rather than if.
Certainly, the west African state's bonds are trading at
distressed levels of more than 2,500 basis points over treasuries.
But the major oil producer has never had any difficulty coming up
with the cash for coupon payments. If Nigeria does default - and it
could be some time this year - it will be because it gets no
benefit from paying its debts, not because it's incapable of paying
them. Nigeria would be the first country to default on its bonds
because it wanted to and not because it had to.
On the face of it, there are relatively few grounds for
concern. Nigeria has long been in arrears to the Paris Club of
bilateral creditors but its relations with the London Club of
private-sector lenders have been much better. It has always made
its private-sector debt repayments in...
