23 February 2017, Sweetcrude, Abuja – Acting President, Prof. Yemi Osinbajo has requested the National Assembly’s approval for the issuance of $500m Eurobond in the international capital market for the funding of 2016 budget deficit.
In a letter to the Speaker, House of Representatives, Hon. Yakubu Dogara, Osinbajo said that the proceeds of the Eurobond would be used to execute some capital projects as specified in the 2016 Appropriation Act.
He said, “Following the high over-subscription of $1bn Eurobond issuance, we wish to take advantage of favourable market conditions to issue a Eurobond debt instrument of $500m.
“This will fund the implementation of the 2016 budget, which is ongoing.
“Given that the implementation of the 2016 budget is still ongoing, we plan to issue the Eurobond between February and March 2017, subject to market conditions.
“This is in order to meet the government’s approved capital expenditure funding plan.”
It said that the 2016 Appropriation Act provided for a deficit of N2, 204.742bn and new borrowings of N1, 818. 675bn respectively.
It also said that the Act also provided for domestic borrowing of N1, 182. 798bn and external borrowing of N635. 877bn.
“While the approved domestic borrowing had been fully incurred, the N635.877bn external borrowing has not been fully accessed.
“The external borrowing incurred to date consists of $600m from the African Development Bank and $1bn Eurobond from the international capital market only.
“Thus, based on the 2016 appropriation and applying the average exchange rate, there is headroom to access further international funds,” the letter read in part.
The letter added that being a market-based instrument, the terms and conditions of the Eurobond may only be determined at the point of issuance.
“However the Debt Management Office and the Federal Government’s appointed transaction parties to the issuance are committed to working assiduously to secure the best terms and conditions for the Federal Republic of Nigeria,” it stated.