Nigeria strives to solve debt crisis

President Obasanjo ended formal talks with the IMF in March

Nigeria is seeking to buy back some of its commercial debts, in an attempt to reduce its overall debt burden.

The country has debts of more than $28bn ($18.02bn) owed to foreign governments grouped together in the Paris Club.

Talks with these lenders to try and reduce the amount owing have stalled over concerns of economic mismanagement.

But Nigeria is now attempting to buy back about $2bn of freely-traded debt owed to commercial investors.

As the commercial debt is trading at well below its original value, the government will only have to pay $470m.

IMF agreement

Francis Beddington from JP Morgan in London told the BBC's World Business Report he believes the move will help Nigeria's economy.

But he also says Nigeria needs to reach an agreement with the International Monetary Fund before things will really take a turn for the better.

"The Paris Club creditors do not restructure or provide debt relief to countries without an IMF agreement," he said.

The price of the Nigerian Par bond rallied on news of the attempted buy-back.

These bonds have been volatile over the past year but have now settled around the minimum price level.

The Nigerian Par bond is described as 'quite a mainstream asset' held by a broad mixture of pension funds, dedicated mutual funds, and some individual investors.