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Nigeria To Raise $3 Billion In Eurobond To Fund Budget Deficits

Nigeria plans to issue $3 billion or more in Eurobonds as international capital markets (ICM) open up and interest rates decline, the Debt Management Office (DMO) said on Tuesday.

Nigeria had planned a Eurobond issue early last year after its sixth sale in 2018, but it decided to defer the 2020 sale due to market turmoil caused by the COVID-19 pandemic.

In April, the head of the debt office said the government was looking to pick advisers. President Mohammadu on Tuesday wrote to the parliament to approve the sum of $6.18 billion external borrowings to finance 2021 budget deficits.

“From recent trends in the ICM, it is now possible for Nigeria to raise funds in the ICM. We estimate that Nigeria may be able to raise $3 billion or more, but not more than $6.18 billion in a combination of tenors between five to 30-years,” President wrote in his letter to the Senate.

Nigeria emerged from its second recession since 2016 in the fourth quarter, but growth is fragile. The government expects a 2021 budget deficit of N5.60 trillion to be financed largely from foreign and local borrowings.

Buhari said it wanted to moderate debt service costs by accessing relatively cheaper funds abroad, especially as global interest rates fall below 2020 levels while local rates begin to rise.

In February, Nigeria said it would trim offshore borrowing to 30 percent of its total loans from 40 percent currently, in a bid to strengthen domestic markets.

Nigeria has been in talks with the World Bank for a $1.5 billion loan, but approvals have been delayed due to concerns over reforms to its currency.

Last week, the country let its naira weaken on the official market against the dollar in a possible move by the central bank to unify its numerous exchange rates. (Reuters)

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