Nigeria halves fuel debt to traders with $1.4 billion repayment

* Debts were from fuel imports from three years ago

* Outstanding debt is still $1.7 billion

By Dmitry Zhdannikov

LONDON, July 5 (Reuters) - Nigeria has repaid $1.4 billion in mostly overdue debts to fuel traders after raising the money via an oil prepayment loan from international lenders, successfully concluding some of the most painful and lengthy debt talks in its history.

The $1.4 billion repayment, which follows a smaller payment to creditors of $400 million earlier this year, will allow the country to halve its fuel debts to $1.7 billion, sources at three trading companies told Reuters.

It will ease the threat of large write-downs for big trading houses, oil firms and Nigerian banks, as well as lowering the risk of insurance claims and legal action from traders, bankers and insurers against the Nigerian National Petroleum Corporation (NNPC).