The Federal government (FG) announced the opening of a dual-tranche Eurobond offering under its Global Medium Term Note Program to finance the nation’s 2024 fiscal deficit, following a protracted wait throughout the year.
The government will issue the bonds for $500 million, according to documents accessed by BrandSpur Nigeria news. A 6.5-year bond with a coupon rate of 10.125 percent and a 10-year bond with a coupon rate of 10.625 percent are the two Eurobond tranches.
In March 2022, Africa’s most populous country raised $1.25 billion at an 8.375 percent interest rate through a seven-year Eurobond, marking the final time it had access to the global debt market. Dollar-denominated debt, or Eurobonds, is a significant source of foreign funding for development projects. The country’s unstable currency may benefit from this issue, while other factors such as low oil production, inadequate reserves, and fiscal quiet may harm Nigeria’s economy’s reputation.
On December 9, 2024, the bonds are anticipated to settle. The Eurobond’s proceeds will be utilized to boost economic expansion and finance important infrastructure projects. Another important step in Nigeria’s efforts to draw in foreign investment and diversify its finance sources is the issue of this Eurobond.
Last month, Wale Edun, the Finance Minister, stated that the federal government would issue a $1.7 billion Eurobond as part of an external borrowing plan to promote economic reforms and fortify the nation’s finances.
According to him, with the approval of the $2.2 billion financing package, which will provide access to the global capital market through a combination of Eurobonds and Sukuk bonds (approximately $1.7 billion from the Eurobond offer and $500 million from Sukuk financing), the first goal is to finish the federal government’s external borrowing program.
The Finance Minister told State House reporters on Thursday during the Federal Executive Council (FEC) meeting at the Presidential Villa, Aso Roc which was chaired by President Bola Tinubu.
He stated that a combination of Eurobonds and Sukuk bonds will be used to raise the financing package, with the Eurobond offer estimated to contribute about $1.7 billion and the Sukuk financing to contribute $500 million.
