Federal Executive Council okays $2.5 billion external borrowing for refinancing

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- The Federal Executive Council (FEC) has given approval for USD2.5 billion Eurobond external borrowing for refinancing

- The minister of finance, Kemi Adeosun, made this disclosure on Wednesday, February 7, after the FEC meeting

- The meeting was chaired by President Muhammadu Buhari and held at the Presidential Villa, Abuja

The Federal Executive Council (FEC) on Wednesday, February 7, approved USD2.5 billion Eurobond external borrowing for refinancing.

This was disclosed to the State House correspondents by the minister of finance, Kemi Adeosun, at the end of the FEC meeting chaired by President Muhammadu Buhari at the Presidential Villa, Abuja, The Nation reports.

NAIJ.com gathered that the minister stated that on the potential savings on the proposed USD2.5 billion refinancing, 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 percent(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.”

Speaking 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 percent to 13 percent. FGN Bonds dropped from about 16-16.50 percent to 13.50 percent

“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."

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In a related development, NAIJ.com previously reported that the Federal Executive Council (FEC) had approved the appointment of six transaction parties for the one billion dollars Eurobond.

Kemi Adeosun, the minister of finance, made the news public following the FEC meeting, which was presided over by President Muhammadu Buhari.

The Eurobond was part of the country’s plan to borrow a total of N1.8 trillion ($5.8 billion) to fund an expected budget deficit of N2.2 trillion.

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