The Federal Government yesterday announced the reappointment of a consortium of banks including Citi Group, Standard Chartered, Stanbic IBTC, Whitten-Case and African Practice to handle the $2.5 billion Eurobond.
The Minister of Finance, Kemi Adeosun, made the disclosure at the end of the Federal Executive Council meeting in Abuja.
Expatiating on the earnings from the $500 million issued in November last year, the Minister disclosed that the proceeds about N162.50 billion were used to redeem Nigerian Treasury Bills (NTBs) which matured in December 2017.
According to her, the immediate impact of the redemption of the matured treasury bills was a significant drop in the bid rates at the auctions of both NTBs and FGN Bonds in December 2017 and January this year.
Adeosun explained that the NTBs rates dropped from about 16 percent to 13 per cent while the Bonds dropped from about 16-16.5 percent to 13.5 percent
She pointed out this translated to savings for government on new borrowing while also making the cost of borrowing for the real sector cheaper since the sovereign rate serves as a benchmark for other borrowers
In addition, she hinted the proposed $2.5 billion Refinancing Bond had that potential of savings of about N64 billion yearly.
The minister clarified further: “The estimated proceeds of the N762.5 billion will be used to redeem NTBs.
“At estimated current NTB rates of 15% (following mop-up operations by the CBN), the savings from the refinancing of N762.5 billion of domestic debt using external capital raising is about N64 billion per annum”, she added.