Nigeria, Africa’s biggest economy, will raise about $3 billion selling Eurobonds in the second week of October, the country’s finance minister said.
The government has approval to raise $6.1 billion from overseas, “so we are looking at doing half of that in the Eurobond market and the other half from bilateral and multilateral sources,” Finance Minister Zainab Ahmed said in a Bloomberg TV interview. “Depending on how the market goes, maybe we can do a little bit more,” she said. The roadshow for the Eurobond sale will start on Oct. 11.
Africa’s largest crude producer has avoided raising external debt since 2018 after oil price plunged cutting revenues and increasing the proportion of income it has to set aside to repay interest on its debts to above 70%.
The government is now working to reduce its debt-service burden by increasing revenue, restructuring its debt portfolio through the conversion of expensive short-term notes into longer tenors and also reducing its overall borrowing, Ahmed said. “Our target is to triple revenues from about 8% of GDP to 15%, and also grow the economy by 7%,” she said.
Proceeds from the sale — the first international sale since 2018 — will help the oil-dependent economy finance projects planned in the 2021 budget and shore up its foreign-exchange reserves, which has come under pressure from lower oil prices and production. The government expects a 2021 budget deficit of 5.60 trillion naira to be financed largely from foreign and local borrowings. Expenditure plans have been prepared for a worst case scenario of oil prices falling to as low as $40 a barrel next year, Ahmed said.
Nigeria’s economy rebounded strongly in June, expanding 5.01%, the fastest pace in seven years, from a contraction of 6.1% the previous year as the easing of coronavirus restrictions allowed economic activity to pick up in the West African nation.