2019 Budget: DMO Eyes Eurobond To Meet Funding Gaps

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BY COBHAM NSA, ABUJA – The Debt Management Office (DMO) says the Eurobonds presents a sure option for raising the remaining component of the 2019 borrowings having exhausted options from multilateral and bilateral bodies at discounted range.

According to the DMO, the arrangement is meant to bridge the funding gaps in the 2019 Appropriation Act that provides for new external borrowing of N824.82 billion (about USD2.7 billion at USD/N305).

In a statement issued in Abuja on Wednesday, the DMO said the plan is rational and in line with its “strategy of reducing debt service cost” for budget financing in the current fiscal year.

Dismissing report that issuing the Eurobonds is not on the card as part of government’s external borrowing programme for 2019, the DMO’s statement said plans for the new external borrowing are meant to “access cheaper funding from Multilateral and Bilateral lenders as may be available.”

It further explained that any outstanding funds’ gap would be addressed through commercial sources that may include Securities Issuance such as Eurobonds in the International Capital Market.

The DMO also assured that efforts would be focused “on its objective of reducing debt service costs by emphasising borrowing from concessional sources while considering Eurobonds and other commercial sources as secondary options.”

The statement however blamed conflicting reports in the media space on issues arising from the Islamic Finance News Nigeria forum where the DMO’s Director-General, Ms Patience Oniha commented on the possibility of the Federal Government issuing a U.S. Dollar denominated Sukuk in 2019.

Responding to enquiries by reporters, Ms Oniha had said such moves by government were “unlikely given the processes involved in the Sukuk issuance.”

A Eurobond is an international bond issued that is denominated in a currency not native to the country where it is issued. Also called external bond; “external bonds which, strictly, are neither eurobonds nor foreign bonds would also include: foreign currency denominated domestic bonds…”- Wikipedia

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