DMO set to redeem N198b NTB

The Debt Management Office says it will repay the N198.03 billion Nigerian Treasury Bills fully at maturity in December 2017.
A statement from the office made available to the News Agency of Nigeria on Tuesday in Lagos indicated that the amount consisted of two bills.
Details provided by the DMO show that N131.415 billion and N66.617 billion of NTBs will mature on December 14 and 21 respectively.
The statement said: “Before now, the practice was to rollover NTBs at maturity.
“It will be recalled that the Federal Government had announced plans to refinance some maturing domestic debt with external borrowing.”
The refinancing plan strategy was part of government’s overall debt management strategy of reducing Debt Service Costs.
Other objectives of this strategy are to free up space in the domestic market for other borrowers and achieve a sustainable debt portfolio mix of 60 per cent domestic and 40 per cent external.
In addition, the redemption over time will help reduce the refinancing risk associated with short-term borrowings through NTBs with tenors of 91, 182 and 365 days.
As at September 30, NTBs accounted for 30.23 per cent of the FGN’s domestic debt of N12.5 trillion compared to the DMO’s target of a maximum of 25 per cent.
The DMO further stated that the NTBs would be redeemed primarily using proceeds of the $500 million, raised through a Eurobond Issuance by Nigeria in November 2017.
It said: “Nigeria had issued a dual-tranche $3 billion Eurobond in November 2017 out of which $2.5 billion is to part-finance the deficit in 2017 Appropriation Act.
“The balance of $500 million is for the refinancing of domestic debt.”
By redeeming the N198.032 billion NTBs, the Federal Government has been implementing its debt management strategy.
The DMO says it expects operators in the market to take advantage of this opportunity to develop other segments of the debt capital market such as corporate bonds.
It added that the strategy of enabling the private sector to access funds and at a lower cost, than was hitherto possible was consistent with the government’s policy of a private-sector led growth.