Nigerian could look the way of Eurobonds to tap new debt the government needs to bridge a gap in its spending plan for 2021.
Offers for a similar issuance on Tuesday were way higher than what was put out, demand dwarfing the debt size four times over, an outcome the debt office designated “one of the biggest financial trades to come out of Africa in 2021.”
The $4 billion sourced abroad after the interest from investors there surpassed the $3 billion originally intended is causing government to bet the international sovereign bond market would be healthy for its borrowing ambition this year.
“We will monitor the markets while still exploring other sources,” Patience Oniha, the Debt Management Office (DMO) chief told Bloomberg via email, noting the entirety of the $6.1 billion the government wants to borrow this year could be in the mould of Eurobonds “if tenors and pricing are good.”
Tuesday marked the first time since 2018 Africa’s biggest economy would be raising debt overseas, easing the way for the Central Bank of Nigeria to shore up supply of the greenback, which it has been rationing to keep pressure off its reserves.
Nigeria had refrained from the international debt market for three years following an oil price slide that contracted earnings and ramped up the measure of revenue it must earmark for debt servicing to over 90 per cent.
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