Nigeria plans to redeem N762.5 billion ($2.5 billion) worth of treasury bills from the proceeds of a planned $2.5 billion Eurobond, to lower borrowing costs for the government, Finance Minister Kemi Adeosun said on Wednesday.
Government expects to save N64 billion each year after it refinances the local bills with the dollar debt, she told reporters after the Federal Executive Council meeting prresided over by President Muhammadu Buhari in the capital Abuja.
In January, the Director General of the Debt Management Office, Ms. Patience Oniha of the debt office said, the government would consider raising $2.5 billion through Eurobonds in the first quarter to refinance a portion of its domestic treasury bills portfolio at lower cost.
The Federal Government said that the purpose of the bond issue was to help to refinance $3 billion worth of a local treasury bill portfolio of N2.7 trillion. It sold $3 billion in Eurobonds in November, part of which it used to fund its 2017 budget, and then paid off N198 billion in treasury bills in December. The debt pay-off led to a drop in rates by around 300 basis points which translates into savings for the government, Adeosun said.
On Wednesday, bond yields rose 50 basis points to a level last seen five months ago as global risk-off sentiment spread to local assets. The rise hit the actively traded five year bond and benchmark 20-year debt the most.
The minister said the cabinet reappointed the banks that handled the previous eurobond sale – Citigroup, Stanbic IBTC Bank and Standard Chartered Bank – for the new bond sale.