FG Plans $2.5bn Eurobond to Lower Government Cost

A proposed $2.5 billion Eurobond to refinance some of Nigeria’s treasury bill portfolio will not increase its overall debt stock but helps to lower cost, the Debt Management Office (DMO) said on Friday.

The DMO said in a statement that proceeds from the bond sale would be converted to naira and used to redeem a more expensive local debt, thereby improving the government’s debt service ratio.

The Minister of Finance, Kemi Adeosun, had said on Wednesday that the country plans to redeem N762.5 billion worth of treasury bills and that it would save government N64 billion each year after the refinancing is completed.

In January, the Director- General of the DMO, Patience Oniha, told Reuters the government would consider raising $2.5 billion through Eurobonds in the first quarter to refinance a portion of its domestic treasury bill portfolio at lower cost.

Nigeria wants to refinance $3 billion worth of a local treasury bill portfolio of N2.7 trillion.

Eurobonds make up more than a fifth of Nigeria’s $15.35 billion foreign debt portfolio as of September 2017 and more than half of interest paid in the third quarter.

Total domestic debt stood at N15.68 trillion by September.