8 February 2018

Nigeria: Govt Approves $2.5bn External Borrowing for Refinancing

The federal government yesterday approved $2.5 billion eurobond external borrowing for the refinancing of existing domestic debts.

The Minister of Finance, Kemi Adeosun, who disclosed this after the Federal Executive Council (FEC) meeting chaired by President Muhammadu Buhari at the presidential villa, Abuja said the estimated proceeds of N762.5 billion will be used to redeem Nigerian Treasury Bills (NTB).

Briefing State House correspondents on the potential savings on the proposed $2.5 billion refinancing at the end the meeting, she said at estimated current NTB rates of 15%, following mop up operations by the CBN, the savings from the refinancing of N762.5 billion of domestic debt using external capital raising is about N64 billion per annum.

On the impact of the use of the proceeds of the $500 million issued in November 2017, she said, "The proceeds, about N162.50 billion, were used to redeem NTBs which matured in December 2017.

"The immediate impact was a significant drop in the Bid Rates at the Auctions of both NTBs and FGN Bonds. In December 2017 and January 2018, NTBs dropped from about 16% to 13%. FGN Bonds dropped from about 16-16.50% to 13.50%

"This translates to savings for government on new borrowing while also making the cost of borrowing for the real sector cheaper since the sovereign rate serves as a benchmark for other borrowers".

The minister announced also that the federal government has reappointed Citigroup, Standard Chartered Bank and Stanbic IBTC Bank, Whitten - Case and African Practice as advisers on its $1bn Eurobond.

The five banks were appointed in December 2016 as advisers following the approval for the issuance of the Eurobond in the International Capital Market and the appointment of transaction parties responsible for the execution of the programme.


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