FEC okays $2.5 billion external borrowing for refinancing

The Federal Executive Council (FEC) on Wednesday approved USD2.5
billion Eurobond external borrowing for refinancing.

The Minister of Finance, Kemi Adeosun, disclosed this to State
House correspondents at the end of FEC meeting chaired by President
Muhammadu Buhari at the Presidential Villa, Abuja.

On the potential savings on the proposed USD2.5 billion
refinancing, she said that the estimated proceeds of N762.5 billion
will be used to redeem Nigerian Treasury Bills (NTB).

She said “At estimated current NTB rates of 15% (following
mop-up operations by the CBN), the savings from the refinancing of
N762.5 billion of Domestic Debt using external capital raising is
about N64 billion per annum.”

On the impact of the use of the proceeds of the USD500 million
issued in November 2017, she said “The proceeds about N162.50
billion were used to redeem NTBs which matured in December
2017.

“The immediate impact was a significant drop in the Bid Rates at
the Auctions of both NTBs and FGN Bonds. In December 2017 and
January 2018:

“NTBs dropped from about 16% to 13%. FGN Bonds dropped from
about 16-16.50% to 13.50%

“This translates to savings for Government on new borrowing
while also making the cost of borrowing for the real sector cheaper
since the sovereign rate serves as a benchmark for other
borrowers,” she added.

The Federal Executive Council (FEC) on Wednesday approved USD2.5
billion Eurobond external borrowing for refinancing.

The Minister of Finance, Kemi Adeosun, disclosed this to State
House correspondents at the end of FEC meeting chaired by President
Muhammadu Buhari at the Presidential Villa, Abuja.

On the potential savings on the proposed USD2.5 billion
refinancing, she said that the estimated proceeds of N762.5 billion
will be used to redeem Nigerian Treasury Bills (NTB).

She said “At estimated current NTB rates of 15% (following
mop-up operations by the CBN), the savings from the refinancing of
N762.5 billion of Domestic Debt using external capital raising is
about N64 billion per annum.”

On the impact of the use of the proceeds of the USD500 million
issued in November 2017, she said “The proceeds about N162.50
billion were used to redeem NTBs which matured in December
2017.

“The immediate impact was a significant drop in the Bid Rates at
the Auctions of both NTBs and FGN Bonds. In December 2017 and
January 2018:

“NTBs dropped from about 16% to 13%. FGN Bonds dropped from
about 16-16.50% to 13.50%

“This translates to savings for Government on new borrowing
while also making the cost of borrowing for the real sector cheaper
since the sovereign rate serves as a benchmark for other
borrowers,” she added.