Nigeria looks abroad for over N300bn budget funding

Nigeria is turning abroad for over N300 billion to bridge the funding deficit in the 2016 budget.

According to the debt management office (DMO), the country is seeking two lead managers and a financial adviser to organise the issuance of $1 billion (N315 billion) of Eurobonds in 2015.

This is coming a few weeks after Kemi Adeosun, minister of finance, informed Nigerians that the country would be borrowing from foreign sources in the third quarter of 2016.

“We have been borrowing largely from the domestic market because we needed to get the exchange rate sorted out to enable us to borrow from the international market. The international borrowings will begin to come in Q3,” Adeosun said in July.

The issuance of the bond is part of a $4.5 billion Nigeria global medium-term issuance programme, which is to run through 2018.

“The move will enable Nigeria to have the flexibility of quickly taking advantage of favourable market conditions in the international capital market to raise funds if and only when the need arises,” Bloomberg quoted the statement to have read.

The government is reported as seeking to appoint two international banks as joint lead managers and a local lender as financial adviser for the whole program.

With bids expected to be submitted by midday on September 19, the Eurobond sales would be the first since July 2013.

Nigeria is aiming at spending its way through one of the worst economic crisis in about three decades, with gross domestic product (GDP) projected in negative territories.

Nigeria’s GDP shrunk by 0.36 percent in the first quarter of 2016, according to the National Bureau of Statistics (NBS).

Nigeria is expected to borrow about $10 billion to fund the 2016 budget deficit, around N3 trillion.