Nigeria Plans $2.5 Billion Eurobond Sale in Q1 2018

by | January 26, 2018 12:45 am



Nigeria plans to sell $2.5 billion of Eurobonds in the first quarter of 2018 to refinance domestic debt and the Central Bank Governor, Godwin Emefiele said investing in cryptocurrency is a “gamble” and hinted it may have to be regulated.
Africa largest economy also intends to start talks with JPMorgan Chase & Co. about being reinstated in its local-currency emerging-market bond index for emerging markets, as the nation’s naira securities were removed in 2015 because of foreign-currency shortages.
The issuance of the Eurobond would complete a dollar-debt program that started with selling $3 billion of Eurobonds in November 2017, said Patience Oniha, Debt Management Office (DMO) Director-General.
The present government administration is in need of funds to increase investment in infrastructure and spur economic growth and as such is selling more foreign debt to help reduce the financing burden from paying double-digit yields on local-currency bonds, as a way that would help free up funds.
The dollar bonds due November 2027 has given yield that fell about 60 basis points to 5.92 percent since they were issued late last year, almost 8 percentage points lower than the yield on similar maturity local-currency government bonds.
The World Bank projects economic growth for Africa’s largest economy at 2.5 percent in 2018 up from 1.0 percent in 2017 while the International Monetary Fund forecast economic expansion by 2.1 percent this year compared with 0.8 percent in 2017, driven by the oil sector.
Oniha is of the opinion that the issuance is subjected to market condition.
Emefiele warned about investing in cryptocurrency (Bitcoin).
“Cryptocurrency or bitcoin is like a gamble, and there is a need for everybody to be very careful,” the CBN governor said in an interview with Bloomberg yesterday.
Nigeria is trading about $4.7 million in Bitcoin a week from about $300,000 per week a year ago, making it rank the 23rd country in the world trading in Bitcoin, as compiled from researcher CryptoCompare.
Emefiele is the latest among regulators globally to express concern about bitcoin, one of the most popular cryptocurrencies, because of high volatility and a perception that it facilitates crime. In January 2017, the central bank released a circular to lenders asking them not to use, hold, or trade virtual currencies pending “substantive regulation and or decision by the CBN.
“We cannot as a central bank give support to situations” where people risk savings to “gamble,” said Emefiele.

 

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