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
” … 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
“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