Indications have emerged that Nigeria may issue another Eurobond any time soon as a Federal Government delegation led by the Minister of Finance, Mrs. Kemi Adeosun, meets bond investors in London on Tuesday (today).
The Federal Government has hinted of plans to borrow from multilateral agencies and the international capital market to fund its huge budget deficit.
Nigeria, which is currently on the brink of recession, is battling major fall in oil production amid the global fall in oil prices.
Adeosun is leading a team of officials that will meet bond investors at London’s five-star Corinthia Hotel on Tuesday, according to a Bloomberg report.
Yields on Nigeria’s existing dollar debt are almost twice as high as those for Kazakhstan and Colombia, two other developing-nation oil producers.
While they’re interested in plans to revive growth, investors said they would also demand to know when and how the Central Bank of Nigeria would end capital controls and a currency peg that have starved the country of dollars and slowed foreign investment to a trickle.
Tapping the offshore bond market this year is crucial for Nigeria to fund a budget of N6.1tn ($31bn) meant to stimulate the economy, according to Rand Merchant Bank.
“They will be under immense scrutiny,” an analyst at RMB, Nema Ramkhelawan-Bhana, said.
The Eurobond market, which Nigeria may try to tap for as much as $1bn, is “an avenue of financing they’re in desperate need of. It’s going to be a tough week for the finance ministry,” she said.
Nigeria has sold dollar bonds twice, the last time in mid-2013, when it raised $1bn of five- and 10-year debt.
Economist and Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, believe the timing for the proposed bond raising is wrong.
He said, “Nigeria currently has a high-risk profile. The rates are high now. I think the plan to approach multilateral agencies will have been a better option.”