The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, has ruled out the issuance of Eurobonds by the Federal Government in 2023 fiscal year as part of revenue generation options.
Ahmed made this clarification late Wednesday while responding to questions about Nigeria’s Eurobond borrowing plans.
The minister clarified that rather than exploring the Eurobond debt instrument option to raise funds for the implementation of the year’s budget, the government would focus on concessionary loans from the development finance institutions (DFIs) such as the World Bank, AfDB and the Islamic Development Bank to bridge deficit gap in the budget.
She said: “Our external borrowing sources are very much open at multilateral institutions … and our focus is on those loans unless we have no option because loan processes are very long.”
“The prices of bonds are too high now in most African countries. No one is going near there now. We hope 2023 will bring about some improvement”, the minister added.
In the 2023 Appropriation Bill now before the National Assembly, the Federal Government had indicated that implementation of the 2023 budget would require about N1.76 trillion external borrowing.
Latest data from the Debt Management Office (DMO) showed that Nigeria’s $1.5 billion Eurobond yield with a maturity of February 2031 increased to 14.29% as of July 12, 2022.
A further analysis of the Eurobonds data indicated that the 5-year Eurobond dated November 2027 with a coupon of 6.5% closed the month of October at $71.39 with a yield of 14.45% while the 10-year Eurobond dated February 2032 with a coupon of 7.87% closed the month of October priced at $64.7 with a yield of 14.45%.
But then,he 5-year Eurobond mentioned above rallied to $80 per $100 par price while the 10-year Eurobond rallied to $77.26 per $100 par price in November.
Currently, Nigeria has a total of about $15 billion Eurobond borrowings on different tenures and coupons.
Even though some analysts believe that the Eurobond market remains reasonable, the minister believes the yields are still high and, therefore, remains a major disincentive for further borrowings.
