December 13, 2017

DMO deploys Eurobond proceeds to repay N198bn TBs

Eurobonds, bonds


By Elizabeth Adegbesan

The Debt Management Office, DMO, yesterday commenced the process of refinancing domestic debt with proceeds of $500 million Eurobond as it announced its intention to repay in full the N198 billion treasury bills (TBs) scheduled to mature this month.

The DMO disclosed this in a statement yesterday, adding: “The N198.032 billion comprises of N131.415 billion and N66.617 billion of NTBs which will mature on December 14, 2017 and December 21, 2017 respectively.”

Before now, the practice has been to rollover NTBs at maturity.

The DMO also stated: “It will be recalled that the Government had announced plans to refinance some maturing domestic debt with external borrowing as part of its overall debt management strategy of reducing Debt Service Costs. Other objectives of this strategy are to free up space in the domestic market for other borrowers and achieve a more sustainable debt portfolio mix of 60 percent Domestic and 40 percent    External.

“In addition, the redemption over time will help reduce the refinancing risk associated with short-term borrowings through NTBs with tenors of 91, 182 and 364 days. As at September 30, 2017, NTBs accounted for 30.23 percent of the FGN’s Domestic Debt of N12.5 trillion compared to the DMO’s target of a maximum of 25 percent.

“The NTBs will be redeemed primarily using proceeds of the $500 million raised through a Eurobond Issuance by Nigeria in November 2017. Nigeria had issued a dual-tranche $3 billion Eurobond in November 2017 out of which $2.5 billion is to part-finance the deficit in 2017 Appropriation Act and the balance of    $500 million is for the refinancing of domestic debt.”