DMO, CBN To Mop N252.43bn Next Week As Senate Approves $1bn Eurobond
The Debt Management Office and the Central Bank of Nigeria (CBN) plans to raise N252.43 billion through the sale of bonds and Treasury Bills even as the legislative arm of government approved the federal government’s request to raise $1 billion through eurobond.
Having raised more than it planned to at the last bond sale in January, the debt office said it will raise N110 billion at the February bond sales which will be reopenings of the previous bond with tenures of five, 10 and 20 years.
DMO said it plans to raise N45 billion each through the 5-year 14.5 per cent July 2021 bond and the 20-year 12.4 per cent March 2036 bond. It will also auction the 10-year 12.5 per cent January 2026 to raise N20 billion.
At the January bond auction, it had planned to raise N130 billion but ended up raising N214.95 billion with yields around 16.9 per cent. Battling its first recession in 25 years, Nigeria is raising funds to support the deficit of its expansionary budget.
The CBN also plans to raise about N142.43 billion in short-dated Treasury bills at an auction on next week, Wednesday. The bank said it would raise N32.43 billion in three-month debt, N30 billion in six-month bills and N80 billion in one-year notes, using a Dutch auction system.
To fund the budget, the government is raising funds through a $1 billion Eurobond and a planned $300 million Diaspora Bond. Finance Minister Kemi Adeosun, Central Bank of Nigeria Governor Godwin Emefiele and other senior government officials have been meeting investors this week in London and the United States on a roadshow to issue the bond with a 15-year maturity.
Senate spokesman Aliyu Sabi Abdullahi yesterday said the only request for approval from the executive was for the issuance of $1 billion Eurobond for the funding of the 2016 budget deficit, and we immediately granted the approval.
Low oil prices have triggered chronic dollar shortages in the economy and battered the naira, which lost a third of its official value last year and is now trading at a 39 percent discount on the black market.
A source with knowledge of the investor meetings, organised by Citigroup and Standard Chartered Bank, told Reuters that oil production and currency were the two main issues investors were considering in pricing the bond this week.
Investors also asked about the continuity of government policies in the absence of President Muhammadu Buhari, who is in Britain on medical leave. “The real concern is oil production and FX. Will there be a further devaluation this year?” the source said, adding that investors queuing for the dollar bond were looking at a potential yield above seven percent.
Abdullahi said the government wanted to use part of the Eurobond proceeds to finance two rail projects. The source added that recurrent expenditure would also be funded from the bond.
The government has laid out plans to spend a record N6.86 trillion to help pull Nigeria out of recession in a draft 2017 budget sent to parliament for approval. It planned to spend N6.06 trillion last year, but struggled to fund it.
