About 26 days to end of the year, the Nigerian government said it launched a dual-tranche Eurobond offering under its Global Medium Term Note Programme to finance the nation’s 2024 fiscal deficit.
Some vital documents obtained revealed that the government will be releasing $500 million worth of the bonds.
Findings showed that the two tranches of the Eurobonds are, a 6.5-year bond with a coupon rate of 10.125 percent and the second tranche is a 10-year bond with a coupon rate of 10.625 percent.
Eurobonds are dollar-denominated debt which is an important source of foreign capital used for development finance.
This issuance can serve as a succour for the country’s volatile currency and uncertainties like silence from the fiscal side, poor reserves, low oil production others could cause damage to the credibility of the Nigerian economy.
On December 9, 2024, the bonds are expected to settle.
It was gathered in the documents that the proceeds from the Eurobond will be used to fund critical infrastructure projects and support economic growth in Africa’s most populous country.
Nigeria has been making efforts to finance its budget, however, this Eurobond issuance signals great development in Nigeria’s efforts to diversify its funding sources and attract foreign investment.
Recall that Wale Edun, Minister of Finance had announced plans for the federal government to issue $1.7 billion Eurobond as part of an external borrowing plan to strengthen the country’s finances and support economic reforms last month.
Edun had noted that federal government looks forward to clearing its external borrowing program with the approval of the $2.2 billion financing package, which will include access to the international capital market through a combination of Eurobonds and Sukuk bonds—approximately $1.7 billion from the Eurobond offer and $500 million from Sukuk financing.
The Minister, while speaking at the State House after the Federal Executive Council meeting presided over by President Bola Tinubu at the Presidential Villa, mentioned that financing package will be raised through a combination of Eurobonds and Sukuk bonds, with approximately $1.7 billion expected to come from the Eurobond offer and $500 million from Sukuk financing.
Investors King reports that Nigeria took advantage of the international debt market in March 2022 of which it raised $1.25 billion at a rate of 8.375 percent through a seven-year Eurobond.
