FG Targets N762.5bn Earnings from $2.5bn Eurobond to Finance Treasury Bills
To save N64bn annually from dollar-backed TBs
The federal government on Wednesday February 07, 2018 in Abuja said its proposed $2.5 billion Eurobond already approved by the National Assembly would yield N762.5 billion proceeds for the refinancing of treasury bills.
According to the government, the deal would result in annual savings of N64 billion.
The Minister of Finance, Mrs. Kemi Adeosun, who made this disclosure while briefing journalists at the end of yesterday’s weekly Federal Executive Council (FEC) meeting in the State House, said the $2.5 billion Eurobond issuance was not a new borrowing but had already been approved by the National Assembly as part of the government’s external borrowing plan.
She recalled how the $500 million bond issued in November 2017, yielded N162.50 billion, which she said was used to redeem treasury bills, which matured in December 2017 and led to a significant drop in the bid rates of both treasury bills and federal government bonds.
Giving the impact of the $500 million bond, Adeosun disclosed that in December 2017 and January 2018, treasury bills bid rates dropped from about 16 per cent to 13 per cent while government bond rates dropped from about 16-16.50 per cent to 13.50 per cent.
“This translates to savings for government on new borrowing while also making the cost of borrowing for the real sector cheaper since the sovereign rate serves as a benchmark for other borrowers,” she stated.
Stating the potential savings from the $2.5 billion refinancing, the minister said the estimated proceeds of the N762.5 billion expected from the bond would be used to redeem treasury bills in a way that “at the estimated current NTB rates of 15 per cent (following mop-up operations by the CBN), the savings from the refinancing of N762.5 billion of domestic debt using external capital raising is about N64 billion per annum.”
Furthermore, Adeosun disclosed that FEC approved a memorandum she presented for the re-appointment of six transaction parties to manage Nigeria’s Eurobond.
She listed the institutions as City Group, Stanbic IBTC, Standard Chartered, Nicodalo, Whitened Case and African Practice.
She explained: “I presented a memo to reappoint transaction parties that play active parts on our Eurobond. This is for the Eurobond issuance of $2.5 billion for refinancing. This is not new borrowing. This is for Nigerian government treasury bills that mature and we then refinance into dollars.
“This $2.5 billion will ultimately be used to buy back treasury bills domestic debt. This will give us approximately N762.5 billion and we expect to save N64 per annum. This is all part of our borrowing plan that will leave us two to three years to pay back our debt.”

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