FG Set To Issue $1billion Eurobond in Q3 2016

The Federal Government has said it would issue $1 billion Eurobond in the third quarter of 2016 towards its securing of $3 billion loan from the World Bank and African Development Bank.

Addressing a meeting with international investors in London on Tuesday, Minister of Finance, Kemi Adeosun, said Nigeria might issue a $1 billion Eurobond in the third quarter and that it was close to securing $3 billion of funding from the World Bank and African Development Bank.

According to Kevin Daly, a money manager at Aberdeen Asset Management Plc, who attended the talks, Adeosun said the government was committed to a budget deficit of not more than N2.2 trillion ($11.1 billion), or 2.1 percent of Gross Domestic Product, GDP.

Nigeria has sold dollar bonds twice, the last time in mid-2013, when it raised $1 billion of five- and 10-year debt. The government has said it would fund the fiscal gap with about $10 billion of debt, half of it in foreign currencies.

Yields on Nigeria’s $500 million of securities maturing in July 2023, dropped five basis points to 7.44 per cent in London by 10:22 a.m. and have dropped 1.2 percentage points this year. Nigeria’s Eurobonds have gained 8.5 percent in 2016, compared with the average of 10.4 percent for high-yielding emerging-market sovereign dollar-debt tracked by Bloomberg.

Three-month naira forwards dropped 0.2 per cent to 274.5 per dollar, suggesting traders see the currency trading near that level in coming months.

Adeosun said Nigeria would probably post budget deficits for at least three years and that its debt-to-GDP ratio would rise to 20 percent from around 13 percent in that period, according to Gregory Kronsten, an analyst at Lagos-based FBN Quest who was at the meetings.