Nigeria’s Federal Government is closely monitoring the market for an additional $2.18bn Eurobond issue after the September 2021 successful deal described as one of the biggest financial trades to come from Africa this year.
The amount will make up the $6.18bn external borrowing, already appropriated in the 2021 budget.
“For the external borrowing, which is about $6.18bn, we raised $4bn in September. For the remaining $2.18bn, we are working with the transaction advisers and monitoring the market.
“If we think the market is good and our supervisors say we should raise that money, we will. But our options are on the table for the external borrowing,” Patience Oniha, Director General, Debt Management Office (DMO) said Monday.
She was speaking on the sideline of a Workshop organized by the Debt Office for The Secretariats of The Senate Committee on Local & Foreign Debts and House Committee on Aids Loans & Debt Management in Niger State.
“We did have what you will call demand, which is the same thing as an order book or subscription of over $12bn, but the advisers said to us, let’s drop the interest rate a bit and see how much we get. Also, the $6bn at once is huge, since there’s a secondary market where they are traded.
“We dropped the rate a bit and we still had demand of over $9 billion. We think that $4bn was a good size to issue at once so that it does not become such a surplus in the market that the price will not be very good both for the sovereign and for other borrowers,” Oniha explained.
As contained in the 2021 Fiscal Framework, the Federal Government projected N8.12 trillion total revenue to fund the 14.57 trillion aggregate expenditure – inclusive of the supplementary budget. Consequently, the fiscal deficit, projected at N6.45 trillion, or 4.52 percent of GDP, is expected to be financed mainly by domestic and external borrowings.
Oniha said the government has so far raised about 90 percent for the domestic component, with plans to raise between N200b and N250bn through sukuk in the next two weeks.
“Out of the N3.145 trillion domestic borrowing for this year from both the appropriation Act and the supplementary, we have raised about N2.8 trillion, remaining is about N350bn.
“We’ll do a sukuk, possibly within two weeks, the remaining we would raise from an FGN bond auction this December,” she stressed.
Oniha also announced plans to issue some green bonds in 2022, with the hope that the government would be able to meet required conditions and certifications especially at a time of global call for green projects.
Nigeria has already issued 2 green bonds – first in 2017, then in 2019, totaling about N25.89bn, to finance projects, including renewable energy, desertification.
Oniha said the government is hopeful of even higher amounts from green bonds in 2022, considering so much has happened about the environment, which should encourage more investors to be looking in that direction.
Oniha had earlier told the participants that between January 2011 and September 2021, the DMO raised over $15.368 billion through Eurobonds and a $300 million Diaspora Bond to finance Budget deficits and various projects.
She said through these securities issuance in the international capital markets has expanded sources of Federal Government funding and created opportunities for Nigerian corporates including banks to raise capital abroad.
She said, most importantly, the proceeds of Eurobonds has also boosted Nigeria’s External Reserves thereby supporting the Naira.
She also noted that the DMO recognises the need for cautious borrowing and that proceeds should be deployed judiciously to promote inclusive growth.
She assured that new borrowings are undertaken in compliance with legislations and that public debt is managed in accordance with international best practice and that Debt is serviced in a timely manner.
The DMO undertakes an annual Debt Sustainability Analysis and is guided by a MediumTerm Debt Management Strategy.
The latest report about to be released by the debt office indicates that the country’s Debt to GDP at about 21.61 percent.
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