Nigeria pays off $500m Eurobond debt

Federal Government of Nigeria has said that it paid off the 6.75% $500 million Jan 2021 Eurobond, which matured on the 28th of January 2021. This was made known on behalf of the government by the Debt Management Office in a statement that was published on its website. According to the statement, funds have been made available by the Federal Government to the Fiscal Agent to repay the principal sum of $500 million and the final interest payment due on the Eurobond. The Eurobond was issued 10 years ago in January 2011 and was Nigeria’s borrowing from the International Capital Market (ICM). 

The Issuance of the Eurobond enabled Nigeria to diversify its sources of funding as it successfully raised a total of $10.67 billion from the ICM thereafter. A total of $11.17 billion was raised to finance the implementation of the Federal Budgets while also contributing to Nigeria’s External Reserves. A cursory look at the foreign debt stock of Nigeria shows that as at September 2020, Nigeria’s outstanding Eurobonds debt stood at $10.87 billion.

Nigeria sold $3.3 billion worth of Eurobond through open competitive bids, aimed at partly funding this redemption of $500 million Eurobond. The Debt Management Office said in the statement that by this redemption, Nigeria has continued to demonstrate in practical terms, its commitment towards honouring all its debt service obligations as and when due.

The DMO further said that the payment of the Eurobond obligation is a strong signal to foreign investors that it can meet its obligations. This will perhaps support optics for any future Eurobond offerings by the FG and could positively impact its borrowing rates as well as its ratings. The government did not clarify how the refund was funded, however, it is not inconceivable to think this may have been funded from the external reserves.