After a long wait all year, the Federal Republic of Nigeria has announced the launch of a dual-tranche Eurobond offering under its Global Medium Term Note Programme to finance the country’s 2024 fiscal deficit.

According to documents seen by BusinessDay, the government will be issuing $500 million worth of the bonds.

The two tranches of the Eurobond are, 6.5-year bond with a coupon rate of 10.125 percent and the second tranche is a 10-year bond with a coupon rate of 10.625 percent.

The last time Africa’s most populous nation tapped the international debt market was in March 2022, when it raised $1.25 billion at a rate of 8.375 percent through a seven-year Eurobond.

Eurobonds are dollar-denominated debt which is an important source of foreign capital used for development finance. This issuance can serve as a succour for the country’s volatile currency and uncertainties like silence from the fiscal side, poor reserves, low oil production others could cause damage to the credibility of the Nigerian economy.

The bonds are expected to settle on December 9, 2024.

The proceeds from the Eurobond will be used to fund critical infrastructure projects and support economic growth.

This Eurobond issuance marks another significant step in Nigeria’s efforts to diversify its funding sources and attract foreign investment.

Wale Edun, minister of finance had announced plans for the federal government to issue $1.7 billion Eurobond as part of an external borrowing plan to strengthen the country’s finances and support economic reforms last month.

He said, “The first objective is to complete the federal government’s external borrowing program with the approval of the $2.2 billion financing package, which will include access to the international capital market through a combination of Eurobonds and Sukuk bonds—approximately $1.7 billion from the Eurobond offer and $500 million from Sukuk financing.

He disclosed this to State House correspondents on Thursday after the federal executive council (FEC) meeting presided over by President Bola Tinubu at the Presidential Villa.

According to him, the financing package will be raised through a combination of Eurobonds and Sukuk bonds, with approximately $1.7 billion expected to come from the Eurobond offer and $500 million from Sukuk financing.

villionz:
you're either misinformed or malinformed.

I only hope you will not be disinformed

Fountane:
Nigeria will rise again

NwaNimo1:

https://businessday.ng/news/article/nigeria-issues-new-500m-eurobonds-to-fund-2024-budget-deficit/

Ironfaceman:
Rotten bonds. An economy that's almost. Bankrupt. What incentives will make investors buy bad market.

LandMann:
When time comes for you to redeem your funds Tinubu will start telling you stories.

Last last this is a new ploy to forcefully seize and convert your USD to Naira.

Invest your USD for Tinubu and his corrupt administration to loot at your own risk. They'll print a valueless naira to pay you back

Harrisonwo:


You buy fx bond in fx currency and still pay back in fx currency.
That issue is, how do they plan to pay back when the fund realized will be used in supporting next year budget instead of a capital project capable of repaying the bill in 7-10yrs time? Are we going to borrow to repay because defaulting will impact on our global credit rating?

LandMann:


Reread my post. When time reach to payback and they cannot find USD because it's been looted, they'll forcefully convert the USD to Naira... U either accept naira or you get nothing. Meanwhile they'll have used inflation to kill naira before the bond matures due to printing of money to sustain the high CBN interest rate

Harrisonwo:

You ain't getting it.. there's a difference between international debt market(fcy) and domestic debt market (lcy). Eurobond are marketed in the foreign capital market (NYSE) and subscription is based in fx. And repayment is also in fx.
If it might interest you to know, the FG through the CBN maintains an acct with JP Morgan and proceeds and repayment are paid there. You can't force foreign investors to accept naira.

Now if going by what you are saying, the worst the govt can do is to dip their hands into dorm accts of its citizens (convert their fx to naira equivalent) and repay the bond. Either way, eurobond are always paid in fx currency except you want to default thereby affecting your credit rating

LandMann:


The article heading and body is misleading.

The first report of this news was around 3 weeks ago here:

https://www.nairaland.com/8267497/nigeria-plans-issue-1.7-billion#132888795

It was reported then that Tinubu government is trying to raise foreign currency denominated debt in Nigeria which is different from Eurobond. According to the report it was first done in September and oversubscribed by around $400 million.

The Eurobond component of this new debt is $1.7 billion.

I think the domestic foreign currency denominated debt is $500 million (which is what I'm warning about).

Ironfaceman:
Rotten bonds. An economy that's almost. Bankrupt. What incentives will make investors buy bad market.