It also appointed Standard Chartered Bank and the Lagos-based financial advisory firm Chapel Hill Denham to consult on this venture.

The Eurobond issue which would be the first since 2022, marks the country’s return to the international bond market after a two-year pause. In March 2022, the country raised $1.25 billion through Eurobond issuances.

This development, as reported by Bloomberg and informed by sources close to the transaction, underscores the intent of Africa’s leading oil-producing nation to re-engage with global financial markets in order to bolster its fiscal budget

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

It further added that the nation might aim to accumulate up to $1bn in international loans throughout 2024.

This 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 year 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 major 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 with our reforms.”

Since assuming office in May 2023, President Tinubu has aggressively pursued policies to revitalise foreign investment inflows into Nigeria.

These initiatives range from implementing two devaluations of the naira to foster a more flexible exchange rate regime, narrowing the disparity between the Central Bank’s policy rate and the yields on government securities, to the controversial elimination of fuel subsidies.

In a related development, the Federal Government says it seeks to borrow N450 billion from its third FGN bond auction of 2024, according to the latest circular from the Debt Management Office.

This figure is 82 per cent less than the N2.5 trillion target from the same bond auction in the previous month.

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

The DMO’s circular detailed that the offer includes three different bonds: a new 3-year bond for March 2027, and re-openings of the 18.50 per cent FGN February 2031 and the 19.00 per cent FGN February 2034 bonds.

Each bond has an allocation of N150 billion, totalling the government’s N450 billion borrowing target for this month.

In 2023, the Federal Government raised about N5.49 trillion through FGN bond auctions which were used to finance the 2023 budget deficit of N11.34 trillion.

In January 2024, the Federal Government raised about N418.197 billion from the four bonds that were auctioned.

The Federal Government in February 2024 realised N1.49 trillion from the two FGN bond offer issued by the DMO below the target of N2.5 trillion.

With the budget deficit in the 2024 budget put at N9.18 trillion, the Federal Government seems committed to borrowing more from the domestic market.

The post JPMorgan, Goldman Sachs, Others to Guide FGN in Fresh Eurobond Issuance appeared first on Tech | Business | Economy.

Issued in July 2013 with a tenor of 10 years and an annual coupon rate of 6.375 percent, the Eurobond forms part of a dual-tranche USD 1 billion Eurobond, according to a statement published on the DMO’s website.

The DMO emphasized Nigeria’s commitment to meeting its debt service obligations, reaffirming the country’s dedication to honoring its financial responsibilities.

The statement from the DMO further underscored Nigeria’s strong debt management operations and planning, citing the successful redemption of Eurobonds and a diaspora bond over the past six years. This track record serves as a testament to Nigeria’s credibility and ability to manage its debt effectively.

The recent redemption of the $500 million Eurobond follows Nigeria’s prior redemptions, including a $500 million Eurobond in July 2018, another $500 million Eurobond in January 2021, and a $300 million diaspora bond in June 2022.

These redemptions, in addition to the latest Eurobond, bring the total amount of securities redeemed by Nigeria in the international capital market to $1.8 billion.

However, concerns have arisen regarding the Federal Government’s low revenue generation. The reliance on oil as the primary revenue source has proven challenging due to factors such as reduced production and the recent removal of subsidies.

As Nigeria redeems its Eurobond and grapples with revenue generation challenges, the country’s commitment to meeting its debt obligations and implementing sound debt management practices remains at the forefront of its financial operations.

The post Nigeria Redeems $500m Eurobond, Demonstrating Strong Debt Management appeared first on Tech | Business | Economy.

Nigeria’s total debt is N41.60trn or $100.07bn, which represents the domestic and external debt stocks of the Federal Government of Nigeria, the thirty-six state governments, and the Federal Capital Territory.

The $15.9 billion Eurobond is the foreign component of the debt Nigeria owes – there are concerns about the increasing accumulation of Eurobonds in the external debt component.

According to economists, Eurobonds may likely hurt the Nigerian economy due to high-interest costs, with the associated exchange rate.

However, on its website, DMO said the country’s major concern is revenue generation.

It said that successive Debt Management Strategies had always indicated that the Federal Government’s preferred source of borrowing was concessional sources rather than commercial sources like Eurobonds.

“For instance, one of the objectives of the Debt Management Strategy 2020-2023 is maximizing funds available to Nigeria from multilateral and bilateral sources in order to access cheaper and long-tenured funds,” it said.

It said that it was an indication that the authorities took cognizance of the limited funding envelopes available to the country due to its classification as a “Lower-Middle-Income country”.

“Given the size of new borrowings in the annual budgets over the years, it will not have been proper for the Federal Government to raise all the funds from the domestic market.

“That will result in the government crowding the private sector and raising borrowing rates. Consequently, some part of the required funding has to be raised externally,” it said.

The DMO said that concessional loans, though relatively cheaper, were limited in amount and were not available for financing infrastructure and other capital projects.

“Thus, Nigeria accesses concessional and semi-concessional loans as may be available, while issuing Eurobonds to part-fiance the annual budgets and the infrastructure projects contained therein, ” it said.

The post Again, DMO Reacts to Concerns over Nigeria’s Rising Debt appeared first on Tech | Business | Economy.

The Eurobond notes were issued on May 30, 2017, as the second tranche of the US$1billion Global Medium Term Programme, with a five-year tenor and a coupon of 7.375 percent, Zenith said in a statement to the Nigerian Exchange Limited on Tuesday.

A Eurobond issue may be used to finance a company’s expansion into a foreign market. The bond raises the money needed in the currency that is needed, without the forex risk.

In September 2019, Zenith redeemed US$392.6million of the notes through a Cash Tender offer ahead of its maturity date of May 30, 2022, the bank explained.

Zenith Bank Plc is a large financial service provider in Nigeria and Anglophone West Africa.

It is licensed as a commercial bank by the Central Bank of Nigeria, the national banking regulator. As of 31 December 2019, it holds $16.1bn in total assets, with shareholders’ equity of $854 million.

The post Zenith Announces Redemption Of $500m Eurobond appeared first on Tech | Business | Economy.