DMO to Issue First 30-Year Naira Bond

The Debt Management Office, on Thursday 4th of April, 2019 revealed plans to issue the country’s first 30-year Naira bond in a move to attract long-term investors and extend the maturity profile of its debt. As reported by Reuters, the country, which has been racking up debt to boost the sluggish economy and fund infrastructure projects, recorded a total public debt of N24.39Tn ($79.44Bn) at the end of 2018, up from N21.7Tn in 2017.

Though the costs of servicing debts have increased significantly, the Minister of Finance, Mrs Zainab Ahmed, said last week that the government had strategies to finance the 2019 budget of N8.83Tn and would consider cheap concessionary loans to reduce costs.

The DMO, in a statement on Thursday, said the new 30-year Federal Government bond would be attractive to long-term investors and would help in “developing the domestic capital market and reducing the re-financing risk” of the Government.

It said it also expected the Government to approve a total borrowing of N1.649Tn in 2019. The Director-General, DMO, Ms Patience Oniha, had said the Federal Government planned to borrow N1.6Tn to fund the 2019 budget. Oniha said the government had been reducing its level of borrowing as it dropped from N2.2Tn in 2017 to N1.6Tn in 2018.

According to her, N1.6Tn has been set for borrowing in 2019, and the government adopted a 50:50 approach to spread its borrowing between international and local borrowings. She said half the borrowing (N824Bn) would be foreign, while the remaining half would be sourced locally.

The statement added that the funds would be raised via Federal Government bonds, Islamic Sukuk and green bonds to fund projects to reduce carbon emissions. “Funds raised will also create jobs and build infrastructures that Nigeria’s parliament must approve the borrowing plan,” the DMO said.

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