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President Muhammadu Buhari is seeking the approval of the National Assembly for the Eurobond sale.
The Ministry of Finance Spokesman Yunusa Abdullahi gave a breakdown on what the Federal Government plans to use the $3.3 billion Eurobond, noting that $2.8 billion would be for external financing of the 2020 budget while $500 million will be for debt refinancing
Debt refinancing refers to the replacement of existing debt with new debt.
The Nigerian government said it would begin its target of influential buyers of the Eurobond also known as roadshow as soon as the National Assembly approves the debt.
Recall in December Nigeria’s Finance Minister Zainab Ahmed said Africa’s top oil producer could issue Eurobonds in the first quarter to finance the 2020 budget.
She, however, said there is a need to discuss with concessional buyers first.
Financial analysts have said the “New external issuance could help Nigeria’s central bank rebuild international reserves that have fallen to the lowest level in two years as authorities defended the naira, which has come under pressure.”
Managing Director Pivot Capital, Lawrence Anosike said, “The good thing is we would receive money in hard currency, and the bad thing is would this money not be embezzled in the name of funding budget and we end up paying debt of what was stolen.”
Nigeria would be joining Gabon, one of the lowest-rated sovereigns in Africa and Ghana, West Africa’s number two economy that sold Eurobonds in recent weeks.
Sovereign credit ratings can give investors insights into the level of risk associated with investing in the debt of a particular country.