Nigerian lawmakers approve $2.21 billion foreign borrowing plan

(Bloomberg) — Nigerian lawmakers have approved President Bola Tinubu’s proposal to borrow $2.21 billion from foreign investors to help plug this year’s budget deficit.

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The government plans to use the funds to partially finance an expected 9.18 trillion naira ($5.46 billion) deficit this year, Tinubu said in a request letter sent to lawmakers earlier this week. External borrowing will be split between $1.7 billion in Eurobonds and $500 million in sukuk, Finance Minister Wale Edun said last week.

The Senate approved its Relief, Credit and Debt Management Committee’s recommendation to the government to increase the amount when it met on Thursday in the capital, Abuja.

Africa’s biggest oil producer had originally planned to issue its first Eurobonds since 2022 earlier this year, but delayed the sale because it found the cost too high. Instead, he sold dollar bonds on the domestic market, receiving $900 million at a yield of 9.67%.

“I suspect Nigeria will have to pay a higher yield for any new Eurobond issue,” Ayodele Salami, chief investment officer of U.K.-based Emerging Markets Investment Management Ltd., said by phone, citing the possible impact of lower oil prices. in 2025 from the financial situation of the country. “I expect the market will be keen to price any new Eurobond with a yield above 10%.”

Nigerian dollar notes due 2029 were trading at 9.45% by 1:34 pm in Lagos, while longer bonds due 2051 were trading at 10.71%.

–With assistance from Emele Onu.

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