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Nigeria appoints four global banks to midwife Eurobonds issuance

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Nigeria on Wednesday appointed four global lenders, JPMorgan, Citigroup, Standard Chartered and Goldman Sachs as bookrunners for its forthcoming eurobond issue, according to the Debt Management Office (DMO).

The debt office also appointed Chapel Hill Denham as Nigerian bookrunner and FSDH Merchant Bank as financial adviser.

It said in a statement that the Transaction Advisers emerged from an Open Competitive Bidding Process as outlined in the Public Procurement Act, 2007 (as amended).

According to the debt office, 38 institutions jostled for the transaction advisers but chose to select eight after “rigorous evaluation to ascertain the technical capacities of the responders to execute the Transaction.”

The eurobonds are aimed at raising the external borrowing portion of the N5.6 trillion deficits in the 2021 budget put at N2.34 trillion.

“Whilst the government expects a successful outing, it will be mindful of costs and risks in terms of tenor and pricing in determining the amount of eurobonds to issue,” the DMO said.

The DMO said proceeds from the bond sale will be used to fund various projects in the budget with the resultant inflow of foreign exchange into the country which will boost Nigeria’s dollar reserves and support the naira.

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Nigeria had planned a eurobond issue early last year after its sixth sale in 2018 where it raised $2.86 billion. But it decided to defer the 2020 sale due to the turmoil caused by the COVID-19 pandemic.

The National Assembly last month approved the external borrowing of about $6.2 billion through the issuance of a eurobond.

The government has said it wanted to moderate debt servicing costs by accessing relatively cheaper funds abroad, as global interest rates fall below 2020 levels while local rates rise.

Nigeria emerged from its second recession since 2016 in the fourth quarter of last year, but growth is fragile.

The government expects a 2021 budget deficit of N5.6 trillion to be financed largely from foreign and local borrowings in equla proportion.

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