Nigerian Govt eyes fresh borrowing through Eurobond in June

The Nigerian government has enlisted the expertise of leading global investment banks, including Citibank NA, JPMorgan Chase & Co, and Goldman Sachs Group Inc., to guide its forthcoming Eurobond issuance.

According to Bloomberg, the Nigerian government appointed Standard Chartered Bank and the Lagos-based financial advisory firm Chapel Hill Denham to consult on the venture.

The Eurobond issue, the first since 2022, marks the country’s return to the international bond market after a two-year pause.

Recall that in March 2022, the country raised $1.25 billion through Eurobond issuances.

Accordingly, sources with knowledge of the latest transaction say the move underscores the intent of Africa’s leading oil-producing nation to re-engage with global financial markets to bolster its fiscal budget.

The size of the Eurobond offer, which is expected before June, is yet to be determined, sources who requested anonymity because they weren’t authorised to comment publicly on the matter, said.

The sources added that Nigeria might aim to accumulate up to $1 billion in international loans throughout 2024.

The external funding is crucial for Nigeria as it seeks to finance a substantial budget deficit outlined in President Bola Tinubu’s N28.8 trillion ($18 billion) spending blueprint for 2024, targeting a fiscal shortfall of N9.8 trillion, or 3.8 per cent of its GDP.

The deficit is expected to be bridged through local and international borrowings and assistance from global financial institutions.

Last December, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, hinted that Nigeria was contemplating issuing Eurobonds later in the year if the rates are considerably lower, stating that significant issuers have informed the country of the possibility this year.

He noted, “It is a matter of discussion at the moment, but we think we will get the support because we are continuing our reforms.”

In the meantime, the Debt Management Office, DMO, recently unveiled a plan to commence moves to raise N450 billion from its third FGN bond auction of 2024. This figure is 82 per cent less than the N2.5 trillion target from the same bond auction in the previous month.

According to a circular by DMO, the auction is set for March 18, 2024, with a settlement date of March 20, 2024.

Nigeria’s total debt stock stood at N87.91 trillion in the third quarter of 2023. A further breakdown showed that external debt rose to $41.59 billion as of September 30, 2023.