Nigerian govt to borrow from int’l debt market to fund 2021 budget deficit

The Federal government has announced eight successful winners from a pool of 38 bidders as transaction advisers for the sale of it’s $6.2 billion Eurobond.

Eurobond is a form of debt instrument.

President Muhammadu Buhari had informed the National Assembly when it presented the 2021 Appropriation Act that the sum of N2.3 trillion ($6.2 billion) would be required to finance part of its estimated N5.2 trillion deficit in the 2021 Budget.

In a statement issued on Wednesday, the Debt Management Office said it has approved JP Morgan, Citigroup Global Markets Limited, Standard Chartered Bank and Goldman Sachs would act as International Bookrunners/Joint Lead Managers; while Chapel Hill Denham Advisory Services Ltd would act as Nigerian Bookrunner.

According to the debt office the selected firms were chosen after a rigorous process to ascertain their technical abilities to execute the sale.

Other firms selected include FSDH Merchant Bank Limited as the financial adviser, White & Case LLP was selected as the international legal adviser, while Banwo & Ighodalo was chosen as the Nigerian legal adviser.

DMO also said the Federal Executive Council (FEC) has authorised these firms to be part of the Eurobond sale, which should start very soon.

“With the approval of the transaction advisers by FEC, the DMO will now accelerate activities towards the issuance of the Eurobonds,” a part of the statement read.

“The Eurobonds to be issued are for the purpose of raising funds for the new external borrowing of N2.343 trillion (about $6.2 billion) provided in the 2021 Appropriation Act to part-finance the deficit.

Whilst the government expects a successful outing, it will be mindful of costs and risks (in terms of tenor and pricing) in determining the amount of Eurobonds to issue.”

“Since the Eurobonds are being issued to part-finance the 2021 budget deficit, the proceeds will be used to fund various projects in the budget.

“In addition, the proceeds will result in an inflow of foreign exchange which in turn, will increase Nigeria’s external reserves and support the Naira exchange rate,” DMO added.