Nigeria’s $3bn foreign notes, a demonstration of investors’ confidence – Adeosun

The Minister of Finance, Mrs. Kemi Adeosun, says the raising of the $3bn at the international capital market has demonstrated strong investor confidence in the Nigerian economy and growth, while providing the long-term funding required financing infrastructure projects at affordable interest rates.

She said the provision of infrastructure was critical to the long-term sustainability of the nation’s economic growth and would provide a more productive economy for current and future generations of Nigerians.

According to her by raising $1.5bn of 30-year notes, Nigeria has emulated a number of our international contemporaries, including Brazil, South Africa, Argentina and Egypt to issue long-dated debt as the basis for long-term infrastructure financing.

While announcing the successful raising of the notes comprising a $1.5bn 10-year series and a $1.5bn 30-year series, Adeosun said the 10-year series would bear interest at a rate of 6.5 per cent, while the 30-year series will bear interest at a rate of 7.625 per cent.

“This is critical to delivering an environment within which both the government and the domestic private sector can rapidly enhance its ability to fund investments in infrastructure projects and broader project financing.

She said the proceeds would be split between the 2017 budget capital projects ($2.bn) and re-financing some of the nation’s short-term domestic debt ($500m).

Capital projects under the 2017 budget include roads, rail, power and housing projects which are crucial to the delivery of the economic recovery and growth plan.

Adeosun said Nigeria raised a further $1.5bn of 10-year notes, and presently had a full ‘basket’ of international debt notes, including five-year, 10-year, 15-year and 30-year issuances trading in the market.

She said this provides international investors with the full range of tradable options in Nigeria’s international debt.

According to her, of the $1.5bn of 10-year notes, $1bn will be allocated to the 2017 capital budget under the $2.5bn approval from the National Assembly.

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She said the balance of $500m allocated to the refinancing of domestic debt was in line with the nation’s strategy to re-balance its domestic/international debt profile.

She, however, said the full amount of $5.5bn approved by the National Assembly was not raised because it was approved in two separate resolutions.

On the issue of re-balancing the nation’s debt portfolio and increasing international borrowing, she said Nigeria had over the last five years, been overly focused on domestic debt, which was short term and high cost.

“Having returned the economy to growth in 2017, and secured a stable and liquid exchange rate regime, we are focused on addressing this issue by diversifying our sources of debt to achieve an optimal balance.

“So far, we have moved our domestic/international debt ratio from 18:82 to 23:77 and we expect this to improve to circa 27:73 by year end, with an ultimate target of 40:60.