From Bloomberg

Nigerian states clamoring to sell bonds before next year’s election are seeing their plans threatened as regulators in Africa’s second-biggest economy tighten the requirements for issuing debt.

Federal officials will prove less willing to approve sales as the February 2015 vote approaches, Arunma Oteh, director general of the Nigerian Securities and Exchange Commission, said in an interview this month. They may take a more skeptical look at each state’s debt levels and allocations from the federal government, said Samir Gadio, a London-based emerging-markets strategist at Standard Bank Group Ltd.

“As you come close to an election we become tougher on the requirements for states to come to market,” Oteh said in a Jan. 15 interview in the capital, Abuja. “I don’t know how many of them will cross the hurdle this year.”

States are planning to pay for upgrades in infrastructure such as roads and railways, while also seeking to boost spending to end power cuts and sustain growth, forecast to be 6.7 percent this year, according to the World Bank. Next year’s federal and state elections may upset their fundraising objectives as Nigerian President Goodluck Jonathan faces divisions in his ruling Peoples Democratic Party.

Election Test

Naira sovereign debt returned 0.2 percent this year, compared with a 2.3 percent loss in South African rand bonds and a 0.7 percent drop for local-currency emerging-market debt, according to data compiled by Bloomberg. The extra yield investors demand to hold Nigerian dollar debt over Treasuries jumped 37 basis points this year to 330 as of Jan. 28, compared with a 33-basis point increase in average emerging-market premiums, according to JPMorgan Chase & Co. indexes.

Written by Chris Kay | Read more at Bloomberg