Nigerian Govt To Issue $500 Million Dollar-Dominated Domestic Bond

General News

The federal government has announced plans to issue $500 million in domestic foreign currency-denominated bonds in three to four weeks’ time.

Wale Edun, the Minister of Finance and Coordinating Minister of the Economy. Edun said this during a quarterly press briefing in Abuja, themed ‘Economic Recovery and Growth: Progress and Prospects 2024’.

He said: “We have an open exchange rate system, it’s not illegal and so we have the issuance of a dollar-denominated security, not depending on the financial architecture of the Western world, not depending on the kind of architecture that you use to raise Eurobonds.

“We’re using the Nigerian financial system, the Securities and Exchange Commission (SEC), the banking system, the investment bankers to issue $500 million in the first instance that will be available and will attract foreign currency held by Nigerians abroad and anybody else who buys into the macroeconomic reform efforts of President Bola Tinubu.

“That issue is a challenge to the best and the brightest in the financial markets. It is due to open in the next three to four weeks maximum.”

No Immediate Plans for Eurobonds
Addressing the potential for raising Eurobonds, Edun clarified that the government has no current plans to pursue this route, contingent on the success of the domestic foreign currency-denominated bonds.

The finance minister said: “Right now, depending on the success of that issue, there is no talk of looking to go to the international markets to raise the euro bond.

“It is one of the options that we have. It is the markets are open to us. Our ratings and our performance merit it.

“The market is open to us but we prefer in the first instance to challenge Nigerians to come home with their money and be part of the Nigerian reform success story that we believe that is where the economy is headed.

“Although these are very, very early stages we are in the right direction. We have turned the corner.”

What you should know
It was earlier reported that the federal government plans to begin the issuance of domestic bonds denominated in foreign currency starting from the second quarter of this year.

The Minister of Finance, Wale Edun, announced the government’s plan to market foreign exchange bonds to Nigerians both at home and in the diaspora.

Edun, however, explained that the delay in issuing the bonds was due to the government’s desire to establish confidence in its fiscal strategy and earn the trust of citizens who are skeptical of government policies.

The International Monetary Fund (IMF) recently expressed concerns over the Nigerian government’s strategy to issue domestic dollar-denominated bonds.

The Fund warns that this move could exacerbate pressures on the naira and elevate the costs associated with naira securities.

It also noted that the federal government’s plan to introduce domestic foreign exchange securities, intended to enhance dollar liquidity in the official market, could fragment the market.