Senate approves $1 billion Eurobond sale as investors fret over oil, forex risk


By Cyril Ogar

Nigeria’s Senate has approved the government’s request to sell a $1

billion Eurobond to help the country finance its budget deficit,

senate spokesman said on Wednesday.

Nigeria is suffering its first recession in 25 years and needs to find

money to make up for shortfall in its budget. Its revenues have

plunged along with global oil prices and militant attacks in its

crude-producing heartland, the Niger Delta.

Finance Minister Kemi Adeosun, Central Bank Governor Godwin Emefiele

and other senior government officials have been meeting investors this

week in London and the United States on a roadshow to issue the bond

with a 15-year maturity.

Adeosun said in October that Africa’s biggest economy had commitments

for half the amount it wanted to raise from the Eurobond, to be issued

in dollars.

” … the only request for approval from the executive was … for the

issuance of $1 billion Eurobond … for the funding of the 2016 budget

deficit, and we immediately granted the approval ,” Senate spokesman

Aliyu Sabi Abdullahi said.

Low oil prices have triggered chronic dollar shortages in the economy

and battered the naira, which lost a third of its official value last

year and is now trading at a 39 percent discount on the black market.

A source with knowledge of the investor meetings, organised by

Citigroup and Standard Chartered Bank, told Reuters that oil

production and currency were the two main issues investors were

considering in pricing the bond this week.

Investors also asked about the continuity of government policies in

the absence of President Muhammadu Buhari, who is in Britain on

medical leave.

“The real concern is oil production and FX. Will there be a further

devaluation this year?” the source said, adding that investors queuing

for the dollar bond were looking at a potential yield above 7 percent.

Senate spokesman Abdullahi said the government wanted to use part of

the Eurobond proceeds to finance two rail projects. The source added

that recurrent expenditure would also be funded from the bond.

The government has laid out plans to spend a record 6.86 trillion

naira ($22.5 billion) to help pull Nigeria out of recession in a draft

2017 budget sent to parliament for approval. It planned to spend 6.06

trillion naira last year, but struggled to fund it.

The government has set out a $30 billion overseas borrowing plan to

finance planned infrastructure projects until 2018, but analysts are

sceptical whether it would be able to raise the funds. ($1 = 305.25



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