FG reveals sources to borrow to fund Nigeria's deficit budget

• Nigeria plans to issue bonds denominated in dollars in order to raise up to $2 billion from local investors
• The domestic dollar bond has a $2 billion program size, United Capital Plc said in an email
• The series one bond commences on Monday and is expected to be effective for five years

Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.

Nigeria intends to raise up to $2 billion from local investors by issuing dollars-denominated bonds, as reported by principal arranger United Capital Plc.

At an investor presentation on Thursday, Finance Minister Wale Edun declared that the $500 million, five-year bond will be released on August 19. Photo Credit: FG
Source: Getty Images

The investment bank stated in an email that the domestic dollar bond has a program size of $2 billion, with series one launching on Monday at a size of $500 million. Bloomberg reported that the bonds will have a tenure of five years.

The bond is aimed at funds from domiciliary accounts, diaspora remittances, and foreign investments; dollar cash deposits will not qualify unless they were made into domestic accounts at least 30 days prior to the issue, according to United Capital.

According to report, the bond is accessible to Nigerians living in the nation and overseas as well as local pension firms.

The most populous country in Africa is issuing dollar bonds domestically to fill funding shortfalls for infrastructure because the market hasn't been conducive to the issuance of Eurobonds.

With a 9.8 trillion naira deficit, the government approved a 28.8 trillion naira ($18.1 billion) spending plan for 2024, which it intends to finance by borrowing from both local and foreign sources.

Legit.ng earlier reported that In an effort to address its budget deficit and support the weak naira, Nigeria, which had planned to issue a Eurobond this year, has opted to postpone the issue and instead sell its debut dollar bond on the local market.

Finance Minister Wale Edun announced on Thursday at an investor conference in Lagos, the country's commercial hub, that the $500 million, five-year bond will be issued on August 19.

Nigeria successfully repays foreign debts

Legit.ng reported that the Central Bank of Nigeria (CBN) reported an increase in international payments of $3.31 billion in the first five months of 2024.

The figure represents a sharp increase of 30.8% rise from the $2.53 billion recorded during the same period in 2023.

Recent data from the apex bank shows that international debts, including foreign debt servicing, remittances, and payments for goods and services, are critical in maintaining Nigeria’s economic stability.

Source: Legit.ng