In an effort to address its budget deficit and support the weak naira, Nigeria, which had planned to issue a Eurobond this year, has opted to postpone the issue and instead sell its first dollar bond on the local market.
Finance Minister Wale Edun announced on Thursday at an investor conference in Lagos, the country’s commercial hub, that the $500 million, five-year bond will be issued on August 19.
He stated in a Bloomberg report that the government will instead focus on Nigerians living in the country as well as the sizeable portion that resides outside as the market conditions had not been favorable to move forward with the Eurobond.
After global interest rates spiked substantially in 2022 in reaction to rising inflation, several African countries were priced out of international finance markets. However, some of these countries, notably Ivory Coast, Benin, Senegal, Kenya, and Cameroon, have made a comeback this year.
The lead arranger United Capital Plc’s managing director for investment banking, Gbadebo Adenrele, stated that the yield on Nigeria’s issue will be comparable to that of its 2029 Eurobonds. In London, the 2029s were quoted at 10.23% at 3:25 p.m.
The most populated country in Africa is facing a large income shortage due to limited tax base and insufficient oil output.
With a 9.8 trillion naira deficit, the government approved a 28.8 trillion naira ($18.1 billion) spending plan for 2024, which it intends to finance by borrowing from both local and foreign sources.
There’s been pressure on the naira too. When President Bola Tinubu loosened currency regulations and let it to float last year, it was purposefully depreciated against the dollar. As a result of dollar scarcity in the local foreign exchange market, it is still under pressure.
Edun stated that although Nigeria has not given up on the Eurobond market, it will wait for more enticing circumstances.
TimesNow.com.ng reported that the Debt Management Office (DMO) has unveiled a new opportunity for subscription to two Federal Government of Nigeria (FGN) savings bonds, priced at N1,000 per unit.
The DMO disclosed this in a statement released on Monday, August 7, 2024, in Abuja.
These savings bonds are designed specifically for retail investors, ensuring a quarterly interest payout and full repayment of the principal upon maturity.
Source: TimesNow.com.ng
