The Federal Government at the weekend listed five tranches of Eurobonds totaling $5.37 billion on the Nigerian Stock Exchange (NSE) and the FMDQ OTC Securities Exchange, paving the way for trading on the dollar-denominated bonds.
The Debt Management Office (DMO), which oversees government bond issues, listed the five tranches of new debt issues, including $750 million, 9.248 per cent notes due in 2049, $1.118 billion notes due in 2025, $1 billion notes due in 2031, $1.25 billion due in 2038 and $1.25 billion 7.143 per cent notes due in 2030.
DMO Director General, Ms Patience Oniha, said the bonds were raised for refinancing of the country’s domestic debt, while the proceeds would be used to fund the fiscal deficit as well as other financing needs of the country.
She outlined that $2.50 billion Eurobonds issued in February 2018 were meant for refinancing of domestic debt while $2.86 trillion Eurobonds issued in November 2018 were purposely for financing of the capital project of the budget.
According to her, the Eurobonds were in line with the Federal Government’s debt management strategy aimed at achieving lower cost.
Oniha noted that listing of foreign currency-denominated debt securities showed government’s unrelenting commitment to supporting the growth of the debt capital market for economic development.
She said government was committed to achieving ratio of 60-40 per cent ratio between domestic and external debts, noting that the government aims at positioning Nigeria in the global capital market through the Eurobonds pointing out that external fund raising has yielded great gains with many research analysts writing about Nigeria.
According to her, central government’s sovereign issues have opened ways for the private sector and other tiers of government to raise funds to finance their projects.
On plans for Eurobond upgrade to finance the 2019 budget, she said the appropriation act 2019 has a deficit.
“A large part of it will be funded by new borrowing of N1.649 trillion and 50 per cent of that is provided as external right there in the appropriation bill act which means we will be borrowing externally. But this time around, we are trying to explore all the options, starting with those that are cheaper, conventional, semi conventional before we now determine in a very short form the balance that we should take to the international market,” Oniha said.
She noted that the DMO and its executives cannot undertake any borrowing on its own without legislative approval.
“So, whatever borrowings you see here listed in whatever form are borrowings approved in one way or the other either through the budget process or a special process,” Oniha said.