Nigeria's rating of BB-minus, three notches below investment grade, was affirmed, Fitch said in a statement.

The ratings agency said continued withdrawals from the excess crude account (ECA), into which Africa's biggest oil producer saves crude oil earnings above a benchmark price, and lower forex reserves were a threat to economic stability.

"The depletion of the ECA and continued gradual fall in international reserves at a time of high oil prices and record high oil production is a major concern," sovereign ratings analyst Veronica Kalema said in the statement.

"In addition, elections in the first half of next year have increased short-term political uncertainty," she said.

Standard & Poor's rates Nigeria one notch lower at B-plus.

Analysts said the Fitch revision was unlikely to affect the pricing of Nigeria's forthcoming $500 million debut global bond, which it plans to issue by the end of the year to establish a benchmark in the international market.

"Ahead of its maiden Eurobond, the market implications of the Fitch outlook revision are probably limited," said Razia Khan, lead economist for Africa at Standard Chartered.

"However, there is considerable market expectation that any eventual external debt issuance by Nigeria is likely to trade tighter than similarly-rated peers," she said.

The excess crude account is meant to guard sub-Saharan Africa's second biggest economy against sharp drops in world oil prices and was a pillar of reforms launched in 2003 backed by the International Monetary Fund.

But there is no clear legal basis to determine how ECA funds should be shared between the federal, state and local governments and the savings have fallen to less than $500 million from $20 billion in 2007 amid political wrangling.

President Goodluck Jonathan last month sent a bill to Parliament to create a sovereign wealth fund, which the government says will give a more transparent and firmer legal basis to manage oil savings.

But Fitch said it would be a challenge to implement this ahead of the elections, likely to be held in April.

The presidential race is set to be the most fiercely contested since the end of military rule more than a decade ago, with no clear consensus candidate in the ruling People's Democratic Party (PDP) for the first time since then.

Jonathan is broadly considered the front runner but he faces a tough battle convincing some ruling party elders to back his election bid and jettison a gentleman's agreement that means the next president should be a northerner.

The unwritten pact in the PDP is meant to prevent tribalism and regional rivalries becoming a factor in federal politics by ensuring power rotates every two terms between north and south.

Jonathan is from the southern oil-producing Niger Delta and inherited the presidency after the death of northern President Umaru Yar'Adua this year part-way through his first term.