Proceeds from $2.5bn Eurobond will be used to refinance debts – DMO

The Debt Management Office (DMO) says the proceeds from the planned $2.5 billion Eurobond will be used to refinance maturing domestic debt obligations of the federal government.

The government had proposed a $5.5 billion Eurobond auction although it only issued $3 billion in 2017.

In a statement sent to National Daily on Thursday, DMO said the proceeds will be converted to naira and that the issuance will not increase public debt stock.

“The purpose is to rebalance the federal government’s debt portfolio by increasing the external component while reducing the domestic component in line with Nigeria’s debt management strategy, which has a target of 40:60 ratio for external to domestic debt from the current position of about 25:75, respectively,” the statement read.

“The proceeds of the planned USD2.50 billion will be converted to naira and be used to redeem relatively more expensive domestic debt. This is expected to save about N64 billion per annum in interest cost which will help to reduce the debt service/revenue ratio and free up the fiscal space for other priorities of government.”

In December 2017, the government redeemed matured treasury bills with proceeds from the $500 million Eurobond auction.

Patience Oniha, DMO DG, has also said the government is planning issue more Sukuk and Eurobond in 2018.