Tinubu’s Govt Set To Borrow From Foreign Investors, Hires 3 Top Banks As Advisers
- The federal government of Nigeria is preparing for its first Eurobond issuance in over two years
- To achieve this, Tinubu's government has hired three leading global investment banks to provide guidance
- Nigeria's Eurobond debt, according to data from the Debt Management Office, stands at $15.1 billion as of September 2023
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Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The federal government has announced its intention to enter the foreign debt market with the first Eurobond issuance in two years.
In preparation, FG has enlisted the expertise of leading global investment banks, including Citibank NA, JPMorgan Chase & Co, and Goldman Sachs Group Inc..
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It also appointed Standard Chartered Bank and the Lagos-based financial advisory firm Chapel Hill Denham to consult on this venture.
What is Eurobond?
A Eurobond is a bond issued by governments outside their own country in a different currency. They are often long-term loans commonly denominated in US Dollars (USD).
A bond is a lending/borrowing agreement between two parties. It's like having a friend borrow from you and pay back with a set interest rate.
This means a government bond is simply the government borrowing money from the public with the agreement to pay back with interest. It is called a Eurobond when offered in a foreign currency like the dollar.
Details of Nigeria's latest Eurobond issuance
Nigeria last issued a Eurobond in March 2022, when $1.25 billion was raised to drive the total Eurobond debt to $15.1 billion as of September 2023.
Bloomberg reports that the federal government's decision to return to the international bond market underscores the intent to bolster its fiscal budget and help provide liquidity for the naira.
The size of the Eurobond offer is presently unknown, but it is expected that the federal government will be looking to raise $1 billion from the international market in 2024, and the Eurobond will be issued before June 2024.
Nigeria has a 2024 budget deficit of N9.8 trillion out of the N28.8 trillion signed into law, Punch reports.
The deficit is expected to be bridged through local and international borrowings and assistance from global financial institutions.
IMF sends a message to CBN on Nigeria's debt
Legit.ng reported that the International Monetary Fund (IMF) has asked the CBN to settle the overdue FX backlog to rebuild trust in the apex bank and the naira.
The organisation disclosed this in its recent Executive Board Post-Financing Assessment with Nigeria report.
The IMF insisted that paying the CBN's dollar obligations would rebuild confidence in the bank and the Nigerian currency.
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Source: Legit.ng
