FG redeems $500 million Eurobond

THE Debt Management Office (DMO) has announced the redemption of Nigeria’s 6.75% $500 million Jan 2021 Eurobond, which matured on the 28th of January 2021.

This is contained in a recent press release that was published on the website of the Debt Management office.

According to the disclosure, funds have been made available by the Federal Government to the Fiscal Agent to repay the principal sum of $500 million and the final interest payment due on the Eurobond.

What you should know

• The Eurobond was issued 10 years ago in January 2011 and was Nigeria’s first foray into the International Capital Market (ICM).
• It’s worth noting that the Issuance of the Eurobond enabled Nigeria to diversify its sources of funding as it successfully raised a total of $10.67 billion from the ICM thereafter.
• A total of $11.17 billion was raised to finance the implementation of the Federal Budgets while also contributing to Nigeria’s External Reserves.
• A cursory look at the foreign debt stock of Nigeria shows that as at September 2020, Nigeria’s outstanding Eurobonds debt stood at $10.87 billion.

Recall that Nairametrics reported the move by the federal government of Nigeria to sell $3.3 billion worth of Eurobond through open competitive bids, which was aimed at partly funding this redemption of $500 million Eurobond.

The Debt Management Office stated in the disclosure that by this redemption, Nigeria has continued to demonstrate in practical terms, its commitment towards honouring all its debt service obligations as and when due.

Why this matters

• The FG announcement that it has repaid its Eurobond obligation is a strong signal to foreign investors that it can meet its obligations. This will perhaps support optics for any future Eurobond offerings by the FG and could positively impact its borrowing rates as well as its ratings.

The government did not clarify how the refund was funded, however, it is not inconceivable to think this may have been funded from the external reserves.

FG redeems $500 million Eurobond