The Federal Government has sought the assistance of top global investment banks such as Citibank NA, JPMorgan Chase & Co, and Goldman Sachs Group Inc to advise on its upcoming Eurobond offering.
To consult on this venture, it also appointed Standard Chartered Bank and the Lagos-based financial advisory firm Chapel Hill Denham.
The Eurobond issue, which is the first since 2022, symbolizes the country's comeback to the international bond market following a two-year hiatus. In March 2022, the country secured $1.25 billion through Eurobond issuances.
As reported by Bloomberg and informed by sources close to the transaction, this development underscores Africa’s leading oil-producing nation's intent to re-engage with global financial markets to bolster its fiscal budget.
According to sources who preferred to remain anonymous as they were not authorized to comment publicly, the report indicated that the size of the Eurobond offer expected before June has not been determined yet.
As per the statement, the nation could target accumulating up to $1bn in international loans by 2024.
This external funding is essential for Nigeria as it strives to finance a significant budget deficit outlined in President Bola Tinubu’s N28.8 trillion ($18 billion) spending plan for 2024, with a focus on a fiscal shortfall of N9.8 trillion, or 3.8% of its GDP.
To bridge the deficit, local and international borrowings and assistance from global financial institutions are expected to be utilized.
Last December, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, suggested that Nigeria might issue Eurobonds later in the year if the rates are considerably lower, as major issuers have informed the country of the possibility this year.
He noted that the matter is currently up for discussion, but he believe we will receive support as we proceed with our reforms.
President Tinubu, after assuming office in May 2023, has aggressively pursued policies aimed at revitalising foreign investment inflows into Nigeria. Among these initiatives are implementing two devaluations of the naira to foster a more flexible exchange rate regime, narrowing the disparity between the Central Bank’s policy rate and the yields on government securities, and the controversial elimination of fuel subsidies.
In a related development, the Federal Government has disclosed its plan to borrow N450 billion from its third FGN bond auction of 2024, as stated in the latest circular from the Debt Management Office.
