The Nigerian government is gearing up for a significant financial move by enlisting the help of top global investment banks for its upcoming Eurobond issuance. Citibank NA, JPMorgan Chase & Co, and Goldman Sachs Group Inc. are among the institutions tapped to advise on the venture, as reported by Bloomberg. Additionally, Standard Chartered Bank and Chapel Hill Denham, a Lagos-based financial advisory firm, have been brought on board to consult on the issuance.
This Eurobond issue, the first since 2022, signals Nigeria’s re-entry into the international bond market after a two-year hiatus. In March 2022, the country successfully raised $1.25 billion through Eurobond issuances. Sources familiar with the current transaction reveal that Nigeria is looking to re-engage with global financial markets to strengthen its fiscal budget.
The exact size of the upcoming Eurobond offer, expected before June, is yet to be determined. However, insiders suggest that Nigeria may aim to secure up to $1 billion in international loans throughout 2024. This external funding is crucial for the country as it seeks to finance a substantial budget deficit outlined in President Bola Tinubu’s N28.8 trillion ($18 billion) spending plan for 2024, targeting a fiscal shortfall of N9.8 trillion, or 3.8 per cent of its GDP.
To bridge this deficit, Nigeria plans to rely on a combination of local and international borrowings, as well as assistance from global financial institutions. Last December, Minister of Finance and Coordinating Minister of the Economy, Wale Edun, hinted at the possibility of issuing Eurobonds later in the year if rates are favorable. He expressed confidence in receiving support due to the country’s ongoing reforms.
In the meantime, the Debt Management Office (DMO) has announced plans to raise N450 billion from its third FGN bond auction of 2024. This figure represents an 82 per cent decrease from the N2.5 trillion target set for the previous month’s bond auction. The auction is scheduled for March 18, 2024, with a settlement date of March 20, 2024.
As of the third quarter of 2023, Nigeria’s total debt stock stood at N87.91 trillion, with external debt reaching $41.59 billion as of September 30, 2023. These developments underscore Nigeria’s strategic financial maneuvers as it navigates its economic landscape and seeks to bolster its fiscal position on the global stage.
