FG sets for $6.2bn Eurobond issuance

The Federal Government is finalising plans to issue the proposed $6.2 billion Eurobond, and has appointed eight transaction advisers to oversee the process.

Proceed from the issuance will be used to partly fund the N5.2 trillion budget deficit captured in the 2021 appropriation Act.

The Debt management Office (DMO) said the Federal Executive Council (FEC) approved the advisory services during last Wednesday’s weekly meeting.

The advisors include: JP Morgan, Citigroup Global Markets Limited, Standard Chartered Bank and Goldman Sachs will act as international bookrunners/joint lead managers, while Chapel Hill Denham Advisory Services Ltd, will act as Nigerian Bookrunner.

FSDH Merchant Bank Ltd was named financial adviser; White & Case LLP as international legal adviser, and Banwo & Ighodalo, as Nigerian legal adviser.

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The transaction advisers emerged from an open competitive bidding process as outlined in the Public Procurement Act, 2007 (as amended), the debt office stated.

A total of 38 institutions had expressed Interest, but the eight institutions emerged after a rigorous evaluation to ascertain the technical capacities of the responders.

With the approval of the transaction advisers, the DMO said it will now accelerate activities towards the issuance of the Eurobonds to facilitate budget funding.

Although there have been concerns about new borrowings, the new $6.2bn Eurobond issuance has raised hope of some inflows into Nigeria’s current low foreign reserves and would help efforts at strengthening the naira.

According to the DMO, “the Eurobonds to be issued are for the purpose of raising funds for the new external borrowing of N2.343 trillion (about $6.2 billion) provided in the 2021 appropriation act to part finance the deficit.

“Whilst the government expects a successful outing, it will be mindful of costs and risks (in terms of tenor and pricing) in determining the amount of Eurobonds to issue.

“Since the Eurobonds are being issued to part finance the 2021 Budget Deficit, the proceeds will be used to fund various projects in the Budget.

“In addition, the proceeds will result in an inflow of foreign exchange which in turn, will increase Nigeria’s External Reserves and support the Naira Exchange Rate.”