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Nigeria’s $2.5 billion Eurobond sale could happen in first quarter
Debt Management Office announced it’s raising a total of $5.5 billion to supplement the country’s budget and pay for infrastructure projects.
However, the finality is dependent on favourable market conditions, according to Debt Management Office (DMO) Director-General Patience Oniha, in a Bloomberg.
Following shortfalls in oil earnings, the Nigerian government offered a $2.5 billion Eurobond last year to supplement its $20.8 billion budget. Another $500 million was also put up for sale.
The $2.5 billion issue is to raise funding for capital projects planned by the Muhammadu Buhari government and service debt from Naira-denominated bonds.
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According to the Nigerian Bureau of Statistics (NBS), Nigeria had a N14.1 trillion ($40 billion) debt from local bonds at fourth quarter last year. On the average, the government pays a hefty 16 percent interest on domestic bonds and moving to raise foreign funds at six percent interest to service the local debt, has been applauded for being cost effective.
Going forward, the government plans to reduce its borrowing cost by increasing percentage of its foreign loans to 40 percent from 30 percent of total debt volume.
Higher foreign currency liquidity also strengthens economic buffer against the dollar shortage that choked the Nigerian economy and sent its recent past recession, the worst in three decades.
October 2015, US-based lender, JP Morgan, delisted Nigeria from its Emerging Market Government Bond Index (GBI-EM) due to dollar shortage and opacity in the nation’s foreign exchange market. Since, dollar exchanges for the Naira have jumped from $20 million to $200 million daily and Patience Oniha, said Nigeria “would like to get back into the index.”
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