THE Federal Government yesterday said it currently has no plans to return to the eurobond market this year, after a sixth outing in November raised $2.86 billion.
The Mohammadu Buhari administration had in 2016 approved a three-year plan to borrow more from international financial markets to finance its deficits and bridge a huge infrastructure gaps.
The government then said it wanted 40 percent of its loans to come from offshore sources to lower borrowing costs and help to fund record-high budgets.
Director General of Debt Management Office (DMO), Patience Oniha said, the government currently has no plans to embark on foreign curreny denominated borrowing but would rely on availbale local sources.
According to her “For 2019, given the process, I would say no. foreign borrowings”
Foreign borrowing for the 2019 budget is set at N802 billion naira ($2.7 billion), Oniha said at an Islamic Finance conference in Lagos.
Nigeria, which emerged from recession last year, has borrowed abroad and at home over the past three years to help finance its budgets and to fund infrastructure projects, but debt servicing cost is also rising.
The government has said it wanted to tap concessionary long-term loans to finance its 2019 budget in addition to borrowing at home.
It sold $3 billion in eurobonds in 2017, part of which it used to fund its budget that year. It then followed with a $2.5 billion eurobond sale last year to refinance local currency bonds at lower cost.
Oniha said the Federal Government would float over N100 billion third Sukuk Bond before the end of 2019.
Speaking at the Islamic Finance Network (IFN) Nigeria Forum organised by the Nigerian Stock Exchange (NSE) in partnership with REDMoney Group in Lagos the DMO boss said the government was perfecting arrangements to float over N100 billion Sukuk Bond for the financing of some infrastructure projects listed in the 2019 budget.
Sukuk are bonds structured to generate returns to ethical investors without infringing on the Islamic law, which forbids interest payments.
“It represents an ownership interest in the asset to be financed rather than a debt obligation.
“It will be this year 2019 by God’s grace because the budget has been approved.
“The projects would be those included in the budget and the borrowing will also be what has been approved in the budget, as part of new domestic borrowing. So, it will be this year,” Oniha said.
She said the government was eager to use borrowing to finance infrastructure, which was what the Sukuk represented.
On the specific amount to be raised, Oniha said the DMO had to issue an amount that the market can absorb.
“Once the advisers can give us an indication of an appetite about them, I have asked them if they can raise N200 billion for instance. It depends on what is on the table.
“We have to issue an amount that the market can absorb, that we are sure we can raise. Then the remaining we can do our regular FGN bond in the domestic market.
“So in summary, we are happy to do more than a N100 billion once we are sure there is demand at a price that compares with that of a similar FGN bond,” she said.