The Acting President has asked the Federal House of Representatives for approval to borrow $500 million from the International Capital Market (ICM).
Acting President Yemi Osinbajo has requested the National Assembly’s approval for the issuance of US$ 500 million Eurobond in the international capital market for the funding of 2016 budget deficit.
In a letter to the Speaker, House of Representatives, Yakubu Dogara, Osinbajo said that the proceeds of the Eurobond would be used to execute some capital projects as specified in the 2016 Appropriation Act.
“Following the high oversubscription of USD one billion Eurobond issuance, we wish to take advantage of favourable market conditions to issue a Eurobond debt instrument of USD 5OO million.
“This will fund the implementation of the 2016 budget, which is ongoing. Given that the implementation of the 2016 budget is still ongoing, we plan to issue the Eurobond between February and March 2017, subject to market conditions.
“This is in order to meet the governments approved capital expenditure funding plan,’’ the letter stated.
It said that the 2016 Appropriation Act provided for a deficit of N2,204.742 billion and new borrowings of N1,818. 675 billion respectively.
It also said that the Act also provided for domestic borrowing of N1,182. 798 billion and external borrowing of N635. 877 billion.
“While the approved domestic borrowing had been fully incurred, the N635.877 billion external borrowing has not been fully accessed.
“The external borrowing incurred to date consists of USD 600 million from the African Development Bank and USD 1 billion Eurobond from the international capital market only.
“Thus, based on the 2016 appropriation and applying the average exchange rate, there is headroom to access further international funds,’’ the letter read in part.
The letter added that being a market-based instrument, the terms and conditions of the Eurobond may only be determined at the point of issuance.
“However the Debt Management Office and the Federal Government’s appointed transaction parties to the issuance are committed to working assiduously to secure the best terms and conditions for the Federal Republic of Nigeria,’’ it stated.