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Nigeria seeks new $500 mln Eurobond sale to fund budget deficit

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Nigeria’s acting president has written to parliament to seek approval for a new $500 million Eurobond sale, a statement said on Wednesday, to help make up for a shortfall in the government’s budget.
Africa’s biggest economy is experiencing its first recession in 25 years, and government revenue has plunged due to a slump in global oil prices and militant attacks in its crude-producing heartland, the Niger Delta.

Osinbajo

The new issue would follow the government’s sale of $1 billion worth of 15-year bonds earlier this month.
“Following the high over subscription of the recent $1 billion Eurobond issuance, we wish to take advantage of favourable market conditions to issue a Eurobond Debt Instrument of $500 million to fund the implementation of the 2016 budget,” Acting President Yemi Osinbajo said in a letter to parliament, according to Wednesday’s statement.
The government has laid out plans to spend a record 6.86 trillion naira ($22.5 billion) to boost the economy in a draft 2017 budget sent to parliament for approval. It planned to spend 6.06 trillion naira last year, but struggled to fund it.
Low oil prices have triggered chronic dollar shortages in the economy and battered the naira, which lost a third of its official value last year and trades at a discount of around 40 percent on the black market.
Vice president Osinbajo, who is acting president while President Muhammadu Buhari undergoes medical treatment in Britain, told parliament that external borrowings for the budget currently consist of $600 million from the African Development Bank and $1 billion from existing Eurobonds.
The country is seeking at least a $1 billion loan from the World Bank and a $1.3 billion loan from China to fund railway projects. Nigeria will also present a reform proposal to the African Development Bank to win the release of a second loan tranche worth $400 million, officials have said.
The government has been in talks with the World Bank for a year and wants to finalise this month a reform proposal necessary for a loan application, according to officials.

(C) Reuters News

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