Nigeria raises $2.86 billion in Eurobonds to fund its budget deficit

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The Nigerian government revealed that in a sale that was three times oversubscribed, it raised $2.86 billion in Eurobonds across three maturities to help fund its budget deficit. The bonds were priced with maturities of seven, 12 and 30 years at 7.625 percent, 8.75 percent and 9.25 percent, respectively.

Prior to issuing the bond, Nigerian officials have been meeting investors at a roadshow organised by Citi and Standard Chartered in London. The meeting which was led by Nigerian Finance Minister Zainab Ahmed, was attended by Budget Minister Udoma Udo Udoma, Central Bank Governor Godwin Emefiele and head of the Debt Management Office (DMO), Ms. Patience Oniha.

The government said the demand for the dollar-denominated bond stood at $9.5 billion from global institutional investors and would help Nigeria fund its budget deficit for 2018.

A statement released by the government said “despite significant oil and wider macro market volatility, Nigeria has successfully raised its external debt requirements for the 2018 budget at a cost considerably lower than many of its peers across Sub-Sahara Africa”.

The offer which closes on November 21, 2018, is Nigeria’s sixth Eurobond sale. The country sold $1.18 billion in a seven-year tenor, $1 billion with 12-year maturity and $750 million for 30-years.

In 2017, the West African country sold $3 billion in Eurobonds, part of which it used to fund its 2017 budget. It then followed with a $2.5 billion Eurobond sale in February 2018 to refinance local currency bonds at lower cost.

Lawmakers said the new bond issue will raise foreign borrowing to 32 percent of Nigeria’s total debt, up from 30 percent at June 2018.

Nigeria approved a three year plan in 2016 to borrow more from abroad. The country wants 40 percent of its loans to come from offshore sources to lower borrowing costs and help to fund record-high budgets.

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