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 Nigeria repays $500 million Eurobond on Due Date

Nigeria, Africa’s largest economy, has fulfilled its debt service obligations by redeeming a $500 million Eurobond on its scheduled due date of July 12, 2023.

This redemption marks another milestone in Nigeria’s successful debt management operations and planning.

 The bond was obtained 5 years ago at a coupon rate of 6.375% per annum. Eurobond debts are typically paid out of the country’s external reserves or via a special fund designated for external bond repayments.

According to the DMO,  the latest redemption now means Nigeria has now repaid a total of $1.8 billion in securities in the International Capital Market (ICM) over the past six years.

As earlier reported by Nairametrics, this is not the first time Nigeria is repaying Eurobonds.  In July 2018, the country redeemed a $500 million Eurobond, followed by another $500 million Eurobond in January 2021.

Additionally, Nigeria successfully redeemed a $300 million Diaspora Bond in June 2022.

See excerpts from BPE confirmation of the payment

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“The Eurobond was issued in July 2013 (as part of a dual-tranche USD1 billion Eurobond) for a tenor of ten (10) years at a coupon of 6.375% per annum.

Nigeria had previously redeemed a USD500 million Eurobond in July 2018, another USD500 million Eurobond in January 2021, and a USD300 million Diaspora Bond in June 2022. These, together with the USD500 million Eurobond redeemed today, bring the total amount of securities redeemed by Nigeria in the International Capital Market (ICM) to USD1.8 billion.

Nigeria’s successful redemption of its Eurobonds and Diaspora Bond in the

ICM over the past six (6) years is a demonstration of its strong debt management operations and planning.”

With the redemption of the $500 million Eurobond, Nigeria continues to strengthen its position as a responsible borrower in the international arena and reaffirms its commitment to sound financial management practices.

What does this mean for Nigeria’s future access to international capital markets?

It means that Nigeria has a strong reputation as a reliable borrower, and can attract more investors who are willing to lend at lower interest rates.

This will enable Nigeria to finance its development projects and diversify its economy away from oil dependence.

Nigeria’s successful repayment of its Eurobond loans also sends a positive signal to other African countries that they can overcome their debt challenges with prudent fiscal management and economic reforms.

More repayments – The next Eurobond payment for Nigeria is due in November 2025 and will require a repayment of about $1.1 billion while two years later a $1.5 billion loan falls due.

While this gives the Tinubu administration a cash flow breather it still portends an economic challenge in the coming years if the country does not sort out its debt challenges.Nairametrics recently reported total public debt rose by fiat to N82 trillion following the unification of the naira. It was N73 trillion before the unification.

Nigeria’s total Eurobond obligation is estimated at about $10.7 billion and with different maturities. Naira-denominated debts are about N53 trillion half of which is the central bank’s Ways and Means loan extension to the government.

Experts opine the country is unlikely to seek further Eurobonds and global economic conditions for foreign currency borrowings remain challenging.

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