FG considers $2.5bn Borrowing Via Eurobonds

The Federal Government will consider raising $2.5bn through Eurobonds in the first quarter to refinance a portion of its domestic Treasury bill portfolio at lower cost, the Director-General, Debt Management Office, Patience Oniha, has said.

According to Oniha, the issue is part of a $5.5bn fund raising programme approved by the National Assembly last year.

The DMO director-general also told Reuters on Thursday that the country would also try to get back into the JP Morgan Government Bond Index, with improving liquidity in the local currency market.

She said a Eurobond placement would depend on market conditions, pricing and tenor.

“We are looking at having the issue probably first quarter depending on what the advisers say and subject to the market conditions,” the DMO director-general told Reuters by phone.

Nigeria could also look at a possible syndicated loan as an alternative, Oniha said.

The Federal Government has said it plans to refinance $3bn worth of a local treasury bill portfolio of N2.7tn ($8.9bn).

In November, Nigeria sold $3bn in Eurobonds, part of which it used to fund its 2017 budget, and then paid off N198bn in treasury bills.

Oniha said local debt yields had started to fall after it paid off the bills in December, though debt was still attractive especially to foreign funds looking at emerging market bonds.

“The reason JP Morgan took us out of the index was liquidity in the FX market. Now there’s an investor window where activities have picked up, that’s a good reason to try to get back in,” Oniha said.

The Federal Governent is planning to raise $2.8bn in new offshore loans as part of its 2018 budget.

Oniha said she could tap capital markets or concessionary loans from the World Bank. But the budget has to be approved by lawmakers before funding options can be considered.