Published On: Thu, Oct 18th, 2018

FEC, Senate approve Buhari’s request to raise $2.9bn Euro Bond

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By Lawrence Olaoye, Ikechukwu Okaforadi and Musa Adamu

The Federal Executive Council (FEC) has approved request for $2.786 billion Euro Bond and other securities from the international capital market.
This is just as the Senate has also approved the issuance of USD2.78 billion from the International Capital Market as proposed in the 2018 Appropriation Act.
This came as the Council, chaired by President Muhammadu Buhari, also okayed six transaction parties’ fees and expenses and the procurement of 600 bullet-proof vests and helmets for Nigeria Customs Service (NCS) to combat rice smuggling into the country.
Accord g to the Minister of Finance, Zainab Ahmed, who briefed newsmen after the FEC meeting the approval of the Euro Bond was to help finance the external borrowing plans of $2.76b to fund the 2018 capital budget.
She added that the Council also approved request to raise $82.54m USD to bridge the shortfall in the $500m Euro Bond that matured in July, 2018.
According to her, “We also got approval for transaction parties for their fees and expenses. There are five parties in the transactions, two joint lead managers, with a combination of three banks.”
The banks include Standard Chattered Bank, FSDH Marchant Bank, White and Case LLP, who are acting as Legal Advisers, ( foreign ) and Banwo and Ighodalo, as Legal Advisers, (Local).”
The Minister said FEC also granted approval for contracts to Africa practice as technical advisers on Communication while disclosing that the six advisory contracts were procured at the total cost of N374.8m
The Minister said the Council equally approved $60m loan for the Livelihood Improvements Family Enterprise Project for the 9 states making up the Niger Delta Region.
The implementation of the loan and grants, she said, will take off in six of the nine states as Akwa Ibom, Rivers and Imo were said to have come short of meeting the requirements for the implementation of the project in their states.
Ahmed however said federal government has established mechanisms to enable those states meet up the requirements.
She said, “Six states met the requirements, but three did not. So, the three states that did not meet the requirements will be assisted with technical support to enable them improve on their public procurement and financial management services to enable them meet the requirements. The Federal Ministry of Agriculture and Rural Development and the Niger Delta Development Commission NDDC, will be the lead implementing Agency.”
She continued, “We also got approval today of 600 each of bullet proof jackets and ballistic helmets for the Nigeria Customs Service NCS.”
She disclosed that the equipment were to assist the Nigeria Customs Service tackle rice smuggling into the country following huge public outcry over the effect of smuggling on local rice production.
At the National Assembly, the Senate also approved the issuance of USD82.54 million to refinance the balance of USD 500 million matured Eurobond in the International Capital Market.
It, however, admonished the Federal Government to do everything possible to reduce or limit its request for more external borrowing and source for other means of generating revenue internally.
This they said, would help avoid a cleverly managed re- conquest of the country through a debt overhang.
Resolutions to this effect were sequel to the Consideration of the report on the New External Capital Raising of USD2.786 Billion from the International Capital Market Approved in the 2018 Appropriation Act; and the External Capital Raising of USD82.54 Million to refinance the balance of USD500 million matured Eurobond in the International Capital Market as presented by the Chairman of Committee on Local and Foreign Debt, Senator Shehu Sani (APC Kaduna Central).
Presenting the report, Senator Sani said that the Committee observed that the “proposed External Capital raising of USD82.54 million to refinance the balance of USD500 Million matured Eurobond in the International Capital Market which matured on 12th July, 2018 with an interest rate of 5.125%.
“That the issuance of both USD2.786 billion and USD 82.54 million from International Capital Market is for the part- financing of 2018 Budget with particular interest to finance key infrastructure projects proposed in the 2018 Budget.
“The Committee also observed that the stern all capital raising of USD2.786 billion will result in a portfolio mix of Domestic Debt- 68 percent and External Debt- 32%, which is an improvement over the ratio of 70:30 as at June 30,2018. This brings the debts portfolio mix closer to the target of 60:40.
“The Committee further observed that the issuance of these binds, will contribute to the implementation of the Debt Management Strategy which seeks to reduce the cost of borrowing, lengthen the maturity of the public debt stock, free- up space in the domestic market for other borrowers and will help to increase Nigeria’s external reserves.”
In his remarks, Senate President, Bukola Saraki, who stressed the need for a holistic oversight of Ministries, Departments and Agencies of government, said that all the Committees will next week go and carry out oversight on the MDAs to ensure that there was full implementation.
It would be recalled that President Buhari had written to the Senate, seeking for the approval of the lawmakers to raise 2.78 billion dollars from the International Capital Market as part of funding of the 2018 budget.
In a letter dated July 23, and read last week by the Senate President, Bukola Saraki, President Buhari said that the sum as approved in the 2018 Appropriation Act, would be used to finance deficits and key infrastructure projects in the 2018 budget.
According to President Buhari, the loan would be raised from Eurobonds and other securities in the international capital market, just as he also asked the lawmakers to approve an external capital sourcing of 82.54 million dollars to refinance the balance of 500 million dollar matured Eurobonds in the international capital market.

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