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Nigeria plans new borrowing via Eurobond in June

Published

8 months ago

March 14, 2024

Following a two-year hiatus, Nigeria is returning to the international bond market with the first Eurobond issue since 2022. The nation issued $1.25 billion worth of Eurobonds in March 2022.

For guidance on its upcoming Eurobond issuance, the Nigerian government has enlisted the services of top international investment banks, such as Citibank NA, JPMorgan Chase & Co., and Goldman Sachs Group Inc. Additionally, it hired Chapel Hill Denham, a financial advisory firm based in Lagos, and Standard Chartered Bank to provide consultation on this project.

According to Bloomberg and sources familiar with the deal, this development highlights Africa’s top oil-producing country’s intention to re-engage with international financial markets in order to support its fiscal budget.

The report mentioned that the size of the Eurobond offer, which is anticipated before June, has not yet been decided. The individuals requesting anonymity stated that they were not authorized to make public comments on the subject. It went on to say that the country might try to get up to $1 billion in foreign loans by the year 2024.

Nigeria needs this outside funding in order to finance a significant budget deficit, as indicated by President Bola Tinubu’s N28.8 trillion ($18 billion) spending plan for 2024, which aims to create a fiscal shortfall of N9.8 trillion, or 3.8% of GDP. It is anticipated that global financial institutions and local and international borrowing will help close the deficit.

In December of last year, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, made a suggestion that the country might consider issuing Eurobonds later this year if the rates were significantly lower. He said that major issuers had already informed Nigeria of the possibility.

He noted, “It is a matter of discussion at the moment, but we think we will get the support because we are continuing with our reforms.”

President Tinubu has actively pursued measures to revive foreign investment inflows into Nigeria since taking office in May 2023. These measures include the contentious removal of fuel subsidies, reducing the gap between the Central Bank’s policy rate and the yields on government securities, and carrying out two naira devaluations to promote a more flexible exchange rate regime.

In a related development, the Debt Management Office’s most recent circular states that the government intends to borrow N450 billion from its third FGN bond auction in 2024. Compared to the N2.5 trillion target from the same bond auction the previous month, this amount is 82% lower.

Related Topics:Debt Management Eurobond Featured Nigeria

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IMF mission concludes 4th loan program assessment in Egypt

Published

12 hours ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

2 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.