FG re-appoints Consortium of Banks to implement $2.5b Eurobond

The Federal Government has announced the re-appointment of a consortium of banks, including Citi Group, Standard Chartered, Stanbic IBTC, Whitten-Case and African Practice, to implement its $2.5 billion Eurobond scheme.
The Minister of Finance, Kemi Adeosun, made this known to State House correspondents after the meeting of the Federal Executive Council in Abuja on Wednesday.
Adeosun explained that the $2.5 billion was not a new borrowing, but Nigerian Treasury Bills that would mature and would be refinanced into dollars, adding that it also fell under the external borrowing scheme for debt refinancing.
She revealed that potential savings on the proposed $2.5 billion refinancing was estimated at N64 billion per annum
She said: “The estimated proceeds of the N762.5 billion will be used to redeem NTBs.
“At estimated current NTB rates of 15 per cent (following mop-up operations by the Central Bank of Nigeria), the savings from the refinancing of N762.5 billion of Domestic Debt using external capital raising is about N64 billion per annum.”
The Minister said the use of the proceeds of the $500 million issued in November 2017, which produced about N162.50 billion, were used to redeem Nigerian Treasury Bills, which matured in December 2017.
Adeosun said: “The immediate impact was a significant drop in the Bid Rates at the Auctions of both NTBs and Federal Government of Nigeria Bonds in December 2017 and January 2018.”
She disclosed that the NTBs dropped from about 16 per cent to 13 per cent, while the Bonds dropped from about 16 to 16.50 per cent to 13.50 per cent.
She maintained that this translated to “savings for government on new borrowing while also making the cost of borrowing for the real sector cheaper “since the sovereign rate serves as a benchmark for other borrowers”.