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Debt Securities

FEC approves new Debt Management strategy for 2020–2023

The FEC has approved a new Medium Term Debt Management Strategy (MTDS) for Nigeria.

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Debt Management Office resumes FGN savings bond offer on August 10, Eurobonds, Patience Oniha, DMO, External debt servicing

The Federal Government has indicated it is looking inward as far as debt is concerned.

This point was unscored in the approval of the medium term Debt Management Strategy for the period 2020-2023 as disclosed by the Debt Management Office (DMO) in a statement issued on Wednesday after the FEC held its meeting in Abuja.

The MTDS  policy as a document tries to articulate the debt mix of the government considering the cost and risk trade-offs that best suit the country’s broader macroeconomic and public debt management

READ: Investors scramble for DMO sovereign sukuk as it records 446% oversubscription

It stated, “The MTDS, 2020-2023 has been prepared by the DMO, in collaboration with Federal Ministry of Finance, Budget and National Planning and the Central Bank of Nigeria.

“Other collaborating stakeholders are the Budget Office of the Federation, National Bureau of Statistics and the Office of the Accountant-General of the Federation.”

READ: Nigeria’s high recurrent costs, low revenue and escalating debt numbers

What has changed

With the new strategy, a larger proportion of new borrowing will be from domestic sources using long-term instruments while for External Borrowing, concessional funding from multilateral and bilateral sources will be prioritised.

Also, the target of fiscal sustainability has been increased from 25% (MTDS, 2016-2019) to 40% in the new strategy.

In simple language, the government wants to increase borrowing from 25% of GDP to 40%. While this will provide investment outlets to investors and mop up cash and calm inflation rate, it will also put a lot of pressure on the domestic debt market, interest rate and liquidity.

READ: Mining Cadestre Office (MCO) generates revenue of N2.303 billion in 2020

The target, according to DMO, was increased to accommodate new borrowings to fund Budget Deficits and other obligations of Government; Promissory Notes to be issued to settle Government Arrears; and, the Ways and Means Advance at the Central Bank of Nigeria.

DMO added that the strategy would sustain the issuance of longer-tenored instruments with tenors of 10 years and above, in order to effectively manage Refinancing Risks.

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Why it matters

The new debt policy has to be reworked in light of the current global pandemic, reduced revenue from shock and volatility in the oil market. The public works in the budget will be funded, indicating there is a low likelihood of project abandonment.

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Government appetite for debt seems to have found some cover or justification from the assertion by DMO that Nigeria is still well below the threshold 55% for countries in Nigeria’s peer group, but massing debt could constraint government flexibility in public finance in the coming years and reduce monetary policy tool available to CBN.

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Debt Securities

Ecobank Nigeria to launch $300 million senior notes on International Debt Market

Ecobank Nigeria has announced that it is seeking to raise $300 million from the international debt capital market through the issuance of senior notes.

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Ecobank Nigeria

Ecobank Nigeria, a subsidiary of Ecobank Transnational Incorporated (‘’ETI’’) has announced that it is seeking to raise $300 million from the international debt capital market through the issuance of senior notes.

This is contained in a disclosure signed by the Group Head, Adenike Laoye and published on the website of the Nigerian Stock Exchange (NSE).

READ: Nigeria makes sudden U-turn, suspends external borrowing from international debt market 

According to the bank, the proceeds from the Eurobond will help to provide medium-term funding for the company and also help to enhance its capacity to support international trade and service in Africa.

A part of the disclosure reads, “Ecobank Nigeria Limited (the “Bank”), a key subsidiary of Ecobank Transnational Incorporated (“ETI”) is seeking to raise capital from the international debt capital market through the issuance of US$300 million senior notes (the “Notes”), pursuant to the United States Securities and Exchange Commission Rule 144A and Regulation S (the “Transaction”).”

READ: FUGAZ; Nigerian banks considered too big to fail

What you should know

  • The Notes will be listed on the London Stock Exchange through a Dutch special purposes funding vehicle.
  • The bank also noted that the transaction is subject to prevailing market conditions and the conclusion of the necessary transaction documentation.
  • It is important to note that Ecobank Nigeria intends to list the Notes on the London Stock Exchange, with the expectation that the Notes will be traded on its regulated market.
  • Also, the Central Bank of Nigeria has confirmed that it has no objection to the Transaction, as stated in the disclosure.
  • Recall that Nairametrics reported in January that Ecobank Nigeria announced that it secured a N50 billion, 10-year bilateral subordinated loan with the aim of maintaining stable liquidity and improving its balance sheet.

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Debt Securities

DMO announces February 2021 FGN Savings Bond offer for subscription

The DMO, on behalf of the Federal Government of Nigeria, has offered for subscription, the February 2021 FGN Savings Bond.

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Debt management office, DMO,Nigeria's Debt to revenue ratio, DMO suspends April 2020 FGN savings bond offer

The Debt Management Office (DMO), on behalf of the Federal Government of Nigeria, recently offered for Subscription the February 2021 Federal Government of Nigeria Savings Bond.

This is according to a notification released on the website of the Debt Management Office on Monday.

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The latest savings bond offer comes in two tranches:

  • 2-year FGN Savings Bond due February 10, 2021: 4.214% per annum
  • 3-year FGN Savings Bond due February 10, 2024: 5.214% per annum
  • Opening date – February 1, 2021
  • Closing date – February 5, 2021
  • Settlement date – February 10th, 2021
  • Coupon payment dates – May 10th, August 10th, November 10th, and February 10th
  • Units of sale –  N1,000 per unit subject to a minimum subscription of N5,000 and in multiples of N1,000 thereafter, subject to a maximum subscription of N50 million.

READ: FEC okays FMBN’s request to purchase banking application software for N487.39 million

According to the circular, the offer is backed by the full faith and credit of the Federal Government of Nigeria and charged upon the general assets of Nigeria.

What you should know

  •  Recall that Nairametrics reported that DMO received a total bid of N134.056 billion in December 2020, indicating an oversubscription of N74.056 billion.
  • The FGN Savings Bond is an investment product issued through the Debt Management Office (DMO) on behalf of the Federal Government.
  • Interested investors were however advised to visit their website in order to get the list of stockbroking firms appointed as distribution agents.

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