Nigeria plans first eurobond with USD3B sale

BLOOMBERG – Nigeria, Africa’s biggest economy, will raise about USD3 billion selling Eurobonds in the second week of October, the country’s Finance Minister said.

The government has approval to raise USD6.1 billion from overseas, “so we are looking at doing half of that in the Eurobond market and the other half from bilateral and multilateral sources”, Finance Minister Zainab Ahmed said in a Bloomberg TV interview.

“Depending on how the market goes, maybe we can do a little bit more,” she said. The roadshow for the Eurobond sale will start on October 11.

Africa’s largest crude producer has avoided raising external debt since 2018 after oil price plunged cutting revenues and increasing the proportion of income it has to set aside to repay interest on its debts to above 70 per cent.

The government is now working to reduce its debt-service burden by increasing revenue, restructuring its debt portfolio through the conversion of expensive short-term notes into longer tenors and also reducing its overall borrowing, Ahmed said. “Our target is to triple revenues from about eight per cent of GDP to 15 per cent, and also grow the economy by seven per cent,” she said.

Business district of Lagos, Nigeria. PHOTO: BLOOMBERG

Proceeds from the sale – the first international sale since 2018 – will help the oil-dependent economy finance projects planned in the 2021 budget and shore up its foreign-exchange reserves, which has come under pressure from lower oil prices and production.

The government expects a 2021 budget deficit of NGN5.6 trillion to be financed largely from foreign and local borrowings. Expenditure plans have been prepared for a worst case scenario of oil prices falling to as low as USD40 a barrel next year, Ahmed said.

Nigeria’s economy rebounded strongly in June, expanding 5.01 per cent, the fastest pace in seven years, from a contraction of 6.1 per cent the previous year as the easing of coronavirus restrictions allowed economic activity to pick up in the West African nation.