By Emman Ovuakporie and Johnbosco Agbakwuru
ABUJA – THE Presidency Wednesday sought the approval of the National Assembly to raise additional $500 million eurobond from the international capital market.
The Acting President, Prof. Yemi Osinbajo in a letter to the House of Representatives explained that the fund would be used to finance the total sum of N4.023 trillion budget deficit in the 2016 and 2017 fiscal years respectively.
The letter read, “The Rt. Honourable Speaker may wish to refer to line items 229 and 244 of the 2016 Federal Government of Nigeria (FGN) Appropriation Act, which provided for a deficit of N2,204.742 billion and new borrowings of N1,818.675 billion respectively.
“The Act also provided for Domestic Borrowing of N1,182.798 billion and external borrowing of N635.877 billion in line items 245 and 246 respectively,” Osinbajo said in the two page letter read by Speaker Yakubu Dogara during Wednesday plenary.
“Following the high oversubscription of the recent USD 1 billion eurobond issuance, we wish to take advantage of favourable market conditions to issue a eurobond debt instrument of USD 500 million to fund the implementation of the 2016 budget, which is still ongoing.
“The Rt. Honourable Speaker may wish to note that in line with the requirement of securities issuances in the ICM, a specific resolution of the National Assembly, as a firm confirmation of the approval of the Legislature for the Federal Government of Nigeria (FGN) to borrow the USD 500 million through the issuance of a eurobond debt instrument in the ICM is required,” the Acting President informed the Parliament.”
The Acting President assured that the proceeds of the eurobond will be used as funding sources to finance the budget deficit, including capital expenditure projects as specified in the 2016 Appropriation Act.
Giving details on the terms and conditions of the eurobond, Prof. Osinbajo said: “being a market-based instrument, the terms and conditions of the eurobond may only be determined at the point of issuance.
“It is important to note that the previous issuances of USD 500 million, USD 1 billion (consisting of two tranches of USD 500 million) and USD 1 billion in January 2011, July 2013 and February 2017, respectively, were issued at coupons of 6.75%, 5.125%, 6.375% and 7.875% based on the prevailing market conditions.
“The debt management office and the Federal Government’s appointed Transaction parties to the issue are committed to working assiduously to secure the best terms and conditions for the Federal Republic of Nigeria.”
He said the Federal Government planned to issue the eurobond between February and March 2017, subject to market conditions, in order to meet the Government’s approved capital expenditure funding plan.
The Acting President solicited the expedition of action towards the passage of resolution of both Chambers of the National Assembly.