Nigeria has issued a $500 million Eurobond to finance its 2024 deficit, with proceeds to support infrastructure and economic growth.
After months of anticipation, Nigeria has officially launched a dual-tranche Eurobond offering to finance its 2024 fiscal deficit.
The offering, which forms part of the country’s Global Medium Term Note Programme, consists of two bonds: a 6.5-year bond with a 10.125 per cent coupon rate and a 10-year bond with a 10.625 per cent coupon rate.
This marks Nigeria’s long-awaited return to the international debt market, following a $1.25 billion raise in March 2022 through a seven-year Eurobond at an 8.375 per cent rate.
Notably, these Eurobonds, denominated in US dollars, are essential for securing foreign capital.
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In turn, the government will use this capital to fund infrastructure projects and support broader economic growth.
Furthermore, the issuance will help bolster Nigeria’s credibility, especially in light of ongoing concerns over a volatile currency, low oil production, and poor foreign reserves.
The bonds will settle on December 9, 2024, and are set to attract significant foreign investment to Nigeria.
Consequently, they will help improve the country’s economic outlook.
Recently, Finance Minister, Wale Edun, outlined the government’s broader external borrowing strategy.
As part of this plan, Nigeria aims to raise $1.7 billion through Eurobonds as part of a larger $2.2 billion financing package.
This package will combine both Eurobonds and Sukuk bonds, with $1.7 billion coming from the Eurobond offer and $500 million from Sukuk financing.
In conclusion, this new Eurobond issuance represents a crucial step in Nigeria’s efforts to diversify its funding sources.
Moreover, it will support the country’s economic reforms while addressing the pressing fiscal challenges it faces in the coming year.
