Market News

• Nation to sell $1.7 billion of eurobonds to fund 2024 budget
• Nigeria raised $900m in debut domestic dollar bond this year

(Bloomberg) -- Nigerian lawmakers approved a proposal by President Bola Tinubu to borrow $2.21 billion from foreign investors to plug a shortfall in this year’s budget.

The government plans to use the funds to partly finance an expected deficit of 9.18 trillion naira ($5.46 billion) for this year, Tinubu said in a letter of request sent to lawmakers earlier this week. The external borrowing will be split between $1.7 billion in eurobonds and $500 million in sukuk, Finance Minister Wale Edun said last week.

The Senate approved a recommendation from its committee on aid, loans and debt management for the government to raise the amount at a sitting on Thursday in the capital, Abuja.

Africa’s biggest oil producer had initially planned to issue its first eurobond since 2022 earlier this year, but deferred the sale because it considered the cost too high. Instead, it sold dollar bonds in the domestic market, raising $900 million at a yield of 9.67%.

“I would suspect that Nigeria would have to pay a higher yield for any new issuance of eurobonds,” Ayodele Salami, chief investment officer at UK-based Emerging Markets Investment Management Ltd., said by phone, citing the possible impact of lower oil prices in 2025 on the nation’s fiscal position. “I would expect the market will look to price any new eurobond at a yield above 10%.”

Nigeria’s 2029 dollar notes traded at at yield of 9.45% by 1.34 p.m in Lagos and the longer dated 2051 paper at 10.71%. 

--With assistance from Emele Onu.