In a significant move to address its fiscal deficit, Nigeria has issued $2.2 billion in Eurobonds, marking its first issuance since March 2022. The bonds consist of a 6.5-year bond with a yield of 10.125% and a 10-year bond at 10.625%. The Nigerian government aims to raise $500 million from foreign investors for the shorter bond, and the total subscription for the bonds exceeded $9 billion, demonstrating strong investor interest [c9719735].
The proceeds from this Eurobond issuance are intended to help cover a fiscal deficit estimated at N4.65 trillion. This comes at a time when Nigeria's external debt servicing is projected to rise to $5.2 billion in 2025, highlighting the ongoing challenges the country faces in managing its debt [c9719735].
The bonds will be listed on the London Stock Exchange, with the transaction expected to settle on December 9, 2024. Minister of Finance Wale Edun and CBN Governor Olayemi Cardoso have expressed confidence in the interest from investors, and the Debt Management Office (DMO) reports diverse participation from various investors [c9719735].
This Eurobond issuance occurs against a backdrop of economic instability, as Fitch Ratings recently cautioned about the stability of Nigeria's foreign exchange market. The Central Bank of Nigeria (CBN) has struggled to stabilize the naira despite raising the monetary policy rate to 27.25% [1b091dcf]. Furthermore, an audit revealed missing funds amounting to $4.5 billion in Nigeria's foreign reserves, raising concerns about the management of these assets [5a5dcf3a].
As Nigeria navigates these fiscal challenges, the introduction of the electronic FX matching platform by the CBN in December 2024 aims to enhance the efficiency of the forex market. However, the country continues to face significant hurdles, including declining oil exports and the need for comprehensive economic reforms [395b8a56].