- FG restates commitment to reduce cost of debt
By Nse Anthony-Uko
(Sundiata Post) – The Nigerian Stock Exchange (NSE) has admitted the FGN 30 year $1.5 billion Euro Bond, FGN 10 year $1.5 billion Euro Bond and FGN five year $300 million Diaspora Bond on its daily official list of the Exchange.
Also, the Debt Management Office (DMO) stated that Federal Government will continue to implement a very prudent fiscal and debt management strategy to reduce the cost of the country’s debt, rebalancing its debt and international debt portfolio to a 60:40 split over the coming years
At the listing of the Bonds, on Thursday in Lagos, the Director-General of the DMO) Ms. Patience Oniha, said that the federal government is listing some of the securities that was issued in the international capital market this year, saying that the government recognised the role of the Nigeria capital market in developing the economy.
According to her, we have already listed N1.5 billion early in the year and we are coming towards the end of the year to list $3.3 billion Eurobond. Oniha noted that the government has accessed the international capital markets four times in 2017 and amidst uncertainty about the perception of Nigeria, was well met by investors and achieved overwhelming success in each offering.
She stated that funding the budget deficit and refinancing the government’s inherited debt portfolio have been the key drivers behind the capital raising plans and will lead to significant benefits, particularly a reduction in cost of funds, noting that the Diaspora bond provided an opportunity for Nigerians in Diaspora to contribute to the development of the nation.
She added that the Diaspora bond has boosted the country’s profile with Nigeria’s first SEC-Registered debt instrument, saying that funds raised would be applied towards developing key infrastructure, with proceeds to be used for budgeted capex and to support the FGN’s drive towards economic diversification from oil revenue and to sustain momentum in tapping the international markets following prior issuances.
Speaking on the way forward, the DG said the office will continue with innovative and diverse fund raising plans to ensure the optimal funding structure for Nigeria vis targeted issuance to address key initiatives such as N100 billion, seven year Ijarah Sukuk due 2024 to be used solely for the construction and rehabilitation of key roads across the six geo-political zones of the country and N10.69 billion five year FGN Green Bond due 2022 to be used solely for green projects in the 2017 Appropriation Act.
Also speaking at the event, the chief executive officer of NSE, Oscar Onyema said, in the fixed income space, the federal government is the largest issuer of bonds on the Exchange, saying the NSE has worked with the DMO and federal government to introduce other types of Bonds. He added that “we would be coming up with other types of products that will give the investors a good menu of options in terms on how to diversify portfolio.