Nigeria Wants to Defer Some Debt Payments

LAGOS (Capital Markets in Africa) — Nigeria will seek to delay payments of some government debt until 2021 when it expects state revenue to recover, Finance Minister Zainab Ahmed said.

A deferral wouldn’t be debt forgiveness, but rather a rescheduling of obligations to free up fiscal space to enable the government to address the coronavirus pandemic, Ahmed told a virtual briefing Tuesday.

“When revenues improve, and we hope by 2021 they should improve, we will be able to resume regular repayment of that debt,” Ahmed said, without specifying what type of debt obligations the government would seek deferral on. She spoke a day after President Muhammadu Buhari urged international financial institutions to cancel the debt obligations of member states to help them withstand the fallout from the virus.

Yields on Nigeria’s $1.25 billion bond due in 2030 fell 73 basis points on Tuesday to 10.64%, paring their rise this year to 372 basis points.

Key Developments:
Private creditors will probably have to waive debt on a case-by-case basis due to legal and financial limitations, the Institute of International Finance said.

The African Union, the UN Economic Commission for Africa, and a group of finance ministers from the continent are designing a special-purpose vehicle to exchange their sovereign debt for new concessional paper.

The Group of 20 nations has called for a debt moratorium for the world’s poorest nations, many of which are in Africa.