Skip to main content

Nigeria To Service $1b Eurobond With N361b


Nigeria is considering a new debt service provisioning of N361 billion ($1.2 billion) for the $1 billion (N305.1 billion) Eurobond which was acclaimed to have been over-subscribed.

When consummated, the development will not only add to the country’s debt stock, its current debt service provision at over N1.4 trillion will rise, and it will deepen the troubled debt-to-revenue ratio which has been impeding the country’s ability to freely finance growth projects.

Government had said its 15-year Eurobond offer was priced at 7.875 per cent, with a lump sum repayment of the principal ($1 billion) at the due date – February 2032.

The investors had opted for a higher yield to cover their assessed risks or devaluation in early negotiations, asking for a 7.5 per cent for a 10-year period or eight per cent and above for a 15-year period, due to foreign exchange crisis and other macroeconomic issues.

However, the aggregate cost for the deal at the offering rate may not be less than N361 billion at the prevailing official exchange rate, considering that investors would be paid in dollar, representing a yearly average cost of about N24.1 billion ($79 million).

A popular economist who would not want his name in print said the net proceeds of the Eurobond would naturally be less than the amount quoted due to service charges incurred in the process, “but we would be debited with $1 billion.”

“If you factor in these costs, you begin to ask whether we should have been here. It is irritating that in the midst of these challenges, misappropriation, huge governance cost and outright embezzlement of public fund still persist.

“The budget items of some ministries are clear fraud and these have put the country on an unsustainable path. What is there to celebrate about the Eurobond? Is it that we are now committing our young generations, even the unborn, to poverty and immediate struggle?” the economist queried.

But the Minister of Finance, Mrs. Kemi Adeosun, in a statement, said: “Nigeria is implementing an ambitious economic reform agenda designed to deliver long-term sustainable growth and reduce reliance on oil and gas revenues while reducing waste and improving the efficiency of government expenditure.

“We are establishing the building blocks for long-term growth and making the hard decisions that must be made to reset our economy appropriately.”

The Director-General of Debt Management Office, Dr. Abraham Nwankwo, also said: “Nigeria is delighted to have successfully priced its third Eurobond issue…The Eurobond is the latest step in a broader debt strategy designed to significantly re-balance our debt profile towards longer term financing and reduce the burden of interest on our annual budget.”

A director at Union Capital Markets Limited, Egie Akpata, said he was sure that the country would raise the amount and predicted an oversubscription earlier, but expressed worry on the pricing, which he said would have been a lot lower if the fundamentals did not get this bad.

“Eurobond is the easiest platform for international fund raising for the country now, because there is no string attached, unlike the International Monetary Fund and the World Bank.

“With the assurance that our daily oil earnings may be more or less this amount, it is not a ‘back breaking’ deal. But considering the exchange rate, local debts would be better off, as the total cost incurred would be less,” he said.

http://investorsking.com/nigeria-to-service-1b-eurobond-with-n361b/

Comments

Post a Comment

Popular posts from this blog

IBB set to return to public domain

TWENTY-FOUR  years after he stepped aside on August 27, 1993, following the crisis that trailed the cancellation of the controversial June 12, presidential election, self-styled military president of Nigeria,  Gen. Ibrahim Badamasi Babangida is about to return to the public domain again. Award-winning  film maker, Obi Emelonye  earlier in the week announced plans to commence production of  “Badamasi”, a biographical film on the former military leader. Pre-production of the film is scheduled to begin next month and will run till June, 2017. Intimating the press earlier about the project, Emelonye, who flew into the country from London, said, “Badamasi” is a story of love, war, politics, violence, diplomacy, coups, corruption and governance laced with heavy dose of Machiavellian intrigue. He said, his decision to embark on this project was informed by the need to profile a Nigerian leader in a historical, but biographical film, a treatment that has been me...
Post a Comment
Read more

Countries with the easiest Visa procedures for International Students

Over time, studying abroad has actually become more accessible to students in a number of countries. You only need to do your research well enough to reveal these countries with good tertiary institutions and relatively easy visa procedures for international students, and take advantage of their offers.  Jumia Travel, the leading online travel agency, shares 4 countries with the easiest visa procedures for international students.  Canada  Canada is considered as one of the top study destinations in the world because of its great universities, reasonable cost of living and beautiful environment and landscape. The country has quite an easy procedure for students to apply for study visas. The process basically requires the student to first apply for and gain entry into a Canadian university and then obtain a Canadian study permit, which is renewable for the length of the students study period. The best part of a Canadian study visa is that, not only can an individual stu...
Post a Comment
Read more

CBN recovers over N51.9bn illegally deducted by commercial banks and returns it to the customers.

The Central bank Nigeria has recovered the said amount of money which were illegally deducted from the customer’s account by most Nigeria Commercial banks in all part of the country. These ill acts by the other banks were bitterly condemned by the chief bank (CBN) because it depicts the country’s banking standard and harm the poor masses. The CBN Acting Director, corporate communications, Mr. Isaac Okorafor, made these open without fear or favor in Port Harcourt during an ongoing interactive section with many stakeholders, south-south zone, and other Union leaders. Mr. Okorafor gave details on how the aforementioned money was discovered and refunded to the poor customers after massive complaints by the customers on illegal funds deduction s from their various accounts by our Nigerian banks. He revealed that the Apex bank is out for the commercial banks if other further news are received from customers. He further stated the actual amount which was illegally deducted by the commerc...
Post a Comment
Read more