Nigeria Denies Shelving Eurobond Sale, Plans March Roadshow

Updated on
  • Government wants to raise up to $1 billion in dollar bonds
  • Nigeria in talks with China Exim Bank, World Bank and AfDB

Nigeria denied that it has shelved a planned Eurobond sale for as much as $1 billion to plug its fiscal deficit and will start meeting investors next month, according to Finance Minister Kemi Adeosun.

“The Eurobond is still very much on,” Adeosun said by phone on Thursday, responding to report from Reuters that a deal had been scrapped. A non-deal roadshow “should be starting early next month” and the finance ministry is in the process of choosing banks to arrange it, she said.

Talks with Export-Import Bank of China for financing are ongoing, she said. Those are happening alongside discussions with the World Bank for a $2.5 billion loan and for $1 billion of funding from the African Development Bank.

Africa’s biggest oil producer and economy plans to raise about $5 billion of external debt this year to help cover a record budget deficit that may be as high as $15 billion. The government also intends to raise about the same amount from local debt markets.

Nigeria has issued dollar bonds twice, most recently in 2013. Yields on its $500 million bond due in July 2023 rose 8 basis points to 8.91 percent at 9:55 a.m. in Lagos, the commercial capital. While the rate has climbed from less than 5.5 percent in May, it is still lower than yields on Nigeria’s local debt. Average rates on naira government bonds have risen 119 basis this year to 11.89 percent, according to Bloomberg indexes.

Nigeria, which used to rely on oil for about two-thirds of government revenue, has seen its finances battered by Brent crude prices falling to 12-year lows of around $30 a barrel. Economic growth slowed to 3 percent last year, the slowest pace since 1999, according to the International Monetary Fund.

President Muhammadu Buhari, who came to power in May, has said that increasing government spending is the only way for Nigeria to revive the economy.

(Updates from fifth paragraph with bond yields.)
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