Nigeria aims to raise US$1 Billion Eurobond to fund budget deficits

Lagos, Nigeria, Capital Markets ion Africa — Nigeria plans to sell as much as US$1 billion of Eurobonds to help fund a record budget deficit, Finance Minister Kemi Adeosun stated on Friday in an interview at the World Economic Forum in Davos, Switzerland.

The Finance Minister explained that the country is planning to hold non-deal roadshows to meet investors and explain the government’s fiscal policies and monetary policies to resuscitate growth. She said:  

“We’re looking at a maximum of $1 billion,” she said. “We need to go out and sell our story, talk to people, talk to the market – and get the best value.”

Prices of oil, on which Nigeria depends for almost all exports and two-thirds of government revenue, have plunged 15 percent in 2016 to a 12-year low of around US$30 per barrel. The Africa’s biggest economy probably grew 3.2 percent in 2015, the slowest growth  since 1999.

In spite of the recently oil fall, the government is optimistic that crude prices will recover in the second half of 2016 and it has no plans to change the budgeted benchmark of US$38 a barrel, Ms. Kemi Adeosun said.

Nigeria has two 10-year Eurobonds , first came to market in 2011 and most recently in 2013 to issued 10-years benchmarked bonds. The yields on its Eurobonds due July 2023 issued at 6.625 percent is now traded at 8.965 percent as at Thursday 21 January 2016. They have risen from under 5 percent since May 2015 as the economy has weakened and investors have pulled out of emerging markets in anticipation of rising interest rates in the U.S., which makes assets there more attractive.