FG planned $2.5bn Eurobond to help lower cost- DMO


A proposed $2.5 billion Eurobond to refinance some of Nigeria’s treasury bill portfolio will not increase its overall debt stock but will help lower cost, the Debt Management Office (DMO) said on Friday.

Proceeds from the bond sale would be converted to naira and used to redeem a more expensive local debt, thereby improving the government’s debt service ratio, the DMO said in a statement.

Finance Minister Kemi Adeosun said on Wednesday that the country plans to redeem N762.5 billion worth of treasury bills and that it would save government N64 billion each year after the refinancing is completed.

In January, the head of the debt office told Reuters the government would consider raising $2.5 billion through Eurobonds in the first quarter to refinance a portion of its domestic treasury bill portfolio at lower cost.

Nigeria wants to refinance $3 billion worth of a local treasury bill portfolio of 2.7 trillion naira.

Eurobonds make up more than a fifth of Nigeria’s $15.35 billion foreign debt portfolio as of September and more than half of interest paid in the third quarter. Total domestic debt stood at 15.68 trillion naira by September.

The Federal Government wants to switch its borrowing mix so that foreign loans account for up to 40 percent of its total debt portfolio by 2019, from about 25 percent, to lower its funding costs and lengthen the repayment period, the DMO said.

Nigeria has reappointed the banks that handled its last Eurobond sale – Citigroup, Stanbic IBTC Bank and Standard Chartered Bank – for the new bond sale.

Agency Report