Nigeria considers Eurobond issue, Buhari to seek Senate approval

Nigeria is considering a Eurobond sale of between $2.8 billion and $3 billion to help partially fund its 2020 budget after President Muhammadu Buhari wins approval from parliament, the adviser to the country’s finance minister said. “From the onset … the government has made plans for a Eurobond and the president has to make application to the National Assembly,” media adviser to the finance minister, Yunusa Abdullahi told Reuters. “If the National Assembly approves then the process can commence.” he said.

Nigeria’s Eurobond plan comes after West African neighbour Ghana sold a $3 billion Eurobond last week that was five times oversubscribed as investors seeking high-yields demand debt despite the impact a coronavirus outbreak in China could have on its major trading partners in Africa.

In 2019, the debt office said it did not tap the international debt market because of time constraints before the end of its budget cycle. The West African country held its last Eurobond sale in 2018, its sixth outing, where it raised $2.86 billion. The debt office has said it would first seek concessionary loans for its 2020 external borrowing of around 850 billion naira ($2.8 billion), and any shortfall might be raised from commercial sources. Abdullahi said the government was considering concessionary loans and that discussions were ongoing.

“The Eurobond would be sought but in terms of which comes first, we don’t know,” he said, referring to concessionary loans which the government prefers to curb rising debt cost.

Buhari signed a record 10.58 trillion naira ($35 billion) budget for 2020 into law last December, paving the way for a likely return to the international debt market as Nigeria struggles to shake off the impact of a 2016 recession it emerged from the following year.

Nigeria’s budget assumes a deficit of 1.52% of the estimated gross domestic product – representing around 2.18 trillion naira ($7.13 bln) to be financed through foreign and domestic borrowing.

The West African country has been borrowing to fund growth after the 2016 recession slashed income and weakened its currency. In December, ratings agency Moody’s downgraded Nigeria’s outlook to negative from stable, citing increased risk to government revenue.

Buhari has asked parliament to approve a request for $23 billion in foreign borrowings for infrastructure projects.