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.
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