The Federal Government is planning to redeem N762.5bn ($2.5bn) worth of Treasury bills from the proceeds of its planned $2.5bn Eurobond, to lower borrowing costs for the government, Finance Minister, Kemi Adeosun, has said.

The country was expecting to save N64bn each year after it refinances the local bills with the dollar debt, she told reporters in Abuja.

In January, the Director-General of the Debt Management Office, Patience Oniha, told Reuters, the government would consider raising $2.5bn through Eurobonds in the first quarter to refinance a portion of its domestic Treasury bill portfolio at lower cost.

The Federal Government wants to refinance $3bn worth of a local Treasury bill portfolio of N2.7tn.

It sold $3bn in Eurobonds in November, part of which it used to fund its 2017 budget, and then paid off N198bn in Treasury bills in December.

The debt pay-off led to a drop in rates by around 300 basis points which translates into savings for the government, Adeosun said.

On Wednesday, bond yields rose 50 basis points to a level last seen five months ago as global risk-off sentiment spread to local assets. The rise hit the actively traded five year bond and benchmark 20-year debt the most.

The minister said the cabinet reappointed the banks that handled the previous Eurobond sale – Citigroup, Stanbic IBTC Bank and Standard Chartered Bank – for the new bond sale.

The Federal Executive Council on had reappointed a consortium of banks to handle the nation’s $2.5bn Eurobond issuance.

Adeosun listed the banks as Citi Group, Standard Chartered, Stanbic IBTC, Whitten-Case and African Practice.

She said the proceeds of the $500m bond issued in November 2017, which she put at about N162.50bn, were used to redeem Nigerian Treasury Bills, which matured in December 2017.

“The immediate impact was a significant drop in the bid rates at the auctions of both the NTBs and FGN Bonds in December 2017 and January 2018,” she stated.

According to the minister, the NTBs dropped from about 16 per cent to 13 per cent, while the bonds dropped from about 16 to 16.50 per cent to 13.50 per cent.


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