FG Targets Up to $1bn in International Loans Through Eurobonds

Federal government has announced its intention to issue a Eurobond, marking its return to the international bond market after its last issuance in March 2022.

The move is part of a larger strategy to finance the budget deficit outlined in President Bola Tinubu’s N28.8 trillion ($18 billion) spending plan for 2024, which projects a fiscal shortfall of N9.8 trillion, or 3.8 percent of the GDP.

According to reports, the government has engaged the services of leading global investment banks, including Citibank NA, JPMorgan Chase & Co, and Goldman Sachs Group Inc., along with Standard Chartered Bank and the Lagos-based Chapel Hill Denham, as advisors, to ensure the success of this initiative.

The upcoming Eurobond issuance, expected to take place before June, is a great milestone for Africa’s largest oil-producing nation as it seeks to re-engage with global financial markets.

Sources explained that Nigeria could aim to secure up to $1 billion in international loans throughout 2024.

The external financing is critical to the country’s management of its ambitious fiscal deficit, according to Minister of Finance and Coordinating Minister of the Economy, Wale Edun.

The shortfall is expected to be covered through a mix of local and international borrowings, along with support from global financial institutions.

Furthermore, the Federal Government has disclosed plans to borrow N450 billion from its third FGN bond auction of 2024.

The borrowing represents a reduction from the N2.5 trillion target of the previous month.

it was revealed that the auction will feature a new 3-year bond and the reopening of existing bonds, with the collective aim of financing the 2024 budget deficit.

FG’s N450 billion borrowing target for March 2024 is set with the recent circular from the Debt Management Office (DMO) announcing the auction details, including the offer of three different bonds, each with an allocation of N150 billion.

The decision to issue Eurobonds was influenced by the potential for lower interest rates and ongoing economic reforms.