Senate okays additional $500m Eurobond

The Senate has approved the request of the Presidency to raise additional $500 million Eurobond from the international capital market for the funding of the 2016 budget.

The Senate arrived at this decision on Wednesday after a thorough debate on the loan request.

Deputy Senate President Ike Ekweremadu who presided over the plenary commended lawmakers for putting aside their political differences to approve the request.

Deputy Majority Leader, Bala Ibn Na’Allah, who moved the motion for the loan request to be approved, urged his colleagues to quickly consider and endorse the request because of its importance to the implementation of the 2016 budget. Senate Minority Leader, Godswill Akpabio seconded the motion.

In a letter dated February 22, 2017, then Acting President Yemi Osinbajo, wrote to the Senate, seeking approval for the executive to float another $500m Eurobond.

The request came just weeks after the Federal Government floated a $1bn Eurobond.

Osinbajo said the government had taken advantage of the fact that the $1billion bond was over-subscribed and was seizing the opportunity of the favourable market conditions to issue the new $500m Eurobond.

Osinbajo recalled that the 2016 Appropriation Act had a deficit of N2.2trillion and a borrowing window of N1.8trillion.

He said the terms and conditions of the Eurobond may only be determined at the point of issuance.

That letter from Osinbajo read in part: “Following the over-subscription of the recent USD 1 billion Eurobond issuance, we wish to take advantage of favourable market conditions to issue a Eurobond debt instrument of USD 500 million to fund the implementation of the 2016 budget, which is still ongoing.

“The Senate President may wish to note that in line with the requirement of securities issuances in the ICM, a specific resolution of the National Assembly, as a firm confirmation of the approval of the Legislature for the
Federal Government of Nigeria (FGN) to borrow the USD 500 million through the issuance of a Eurobond debt instrument in the ICM is required.

“It is important to note that the previous issuances of USD 500million, USD 1 billion (consisting of two tranches of USD 500 million) and USD1 billion in January 2011, July 2013 and February 2017, respectively, were issued at coupons of 6.75percent, 5.125percent, 6.375percent and 7.875percent based on the prevailing market conditions.

“The Debt Management Office and the Federal Government’s appointed Transaction parties to the issue are committed to working assiduously to secure the best terms and conditions for the Federal Republic of Nigeria”.

According to the then Acting President, the Federal Government planned to issue the Eurobond between February and March 2017, subject to market conditions, in order to meet Government approved capital expenditure funding plan.