Nigeria to Sell More Eurobonds After Concessional Borrowing

LAGOS (Capital Markets in Africa) – Nigeria considers selling more Eurobonds to help fund record-high spending plans that seek to lift the West African economy out of its worst slump in 25 years.

 The government raised $500 million last month and $1 billion in February in its first Eurobond sales since 2013. It also expects to receive the remaining $400 million of a $1 billion loan from the African Development Bank and is negotiating with the World Bank for at least $1 billion in budget support.

“We’ll try and maximize concessionary financing, then the balance will be made up from euro-borrowings,” Budget and Planning Minister Udoma Udo Udoma said Friday in an interview with Lagos-based Channels Television.

Nigeria proposed a record 7.3 trillion naira ($23 billion) budget for this year, saying increased investments in power, roads, rail, and ports are needed to stimulate growth after a decline in oil and foreign-currency shortages caused the economy to contract by 1.5 percent last year. The government plans to borrow abroad and internally to help plug a 2.3 trillion naira deficit, according to Udoma.

The Central Bank of Nigeria wants to ultimately “arrive at” a market-determined exchange rate regime, which the International Monetary Fund said would help boost investor confidence but requires time to do so, according to Udoma. The central bank has sold foreign currency to prevent the naira from falling below 315 against the dollar after the regulator removed a 197-199 naira-dollar currency peg in June.