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FG Picks JP Morgan, Citigroup, Others As Advisers For Fresh $6.2 Billion External Borrowing

The Federal Government (FG) has appointed some transaction advisers to facilitate the issuance of its forthcoming Eurobonds in the international capital market.

The Publisher Nigeria gathered that the government has picked JP Morgan, Citigroup, Standard Chartered and Goldman Sachs as international bookrunners on the $6.2 billion Eurobond issue.

Others are Chapel Hill Denham Advisory Services Ltd as Nigerian Bookrunner, FSDH Merchant Bank Ltd as Financial Adviser, White & Case LLP as International Legal Adviser and Banwo & Ighodalo as Nigerian Legal Adviser.

This disclosure is contained in a press statement titled, ‘Towards financing the 2021 Appropriation Act – FGN appoints transaction advisers for a Eurobond issuance’, issued by the Debt Management Office (DMO), on Wednesday, and can be seen on its website.

The DMO said that the Eurobonds are aimed at raising funds for external borrowing of $6.2 billion (N2.343 trillion) earmarked in the 2021 budget to partly finance the government’s deficit.

DMO said, “Whilst the government expects a successful outing, it will be mindful of costs and risks in terms of tenor and pricing in determining the amount of eurobonds to issue.’

“A total of 38 institutions responded to the Expression of Interest, and after rigorous evaluation to ascertain the technical capacities of the responders to execute the transaction, the eight institutions above were selected.”

The DMO said proceeds from the bond sale will be used to fund various projects in the budget with the resultant inflow of foreign exchange into the country which will boost Nigeria’s external reserves and support the naira currency.

n case you missed it

  • The Federal Government had planned to issue Eurobond early last year after its sixth sale in 2018 where it raised $2.86 billion. But it decided to defer the 2020 sale due to the devastating impact of the Covid-19 pandemic.
  • The National Assembly last month approved the external borrowing of about $6.2 billion through the issuance of a Eurobond. The government has said it wanted to moderate debt servicing costs by accessing relatively cheaper funds abroad, as global interest rates fall below 2020 levels while local rates rise.
  • Nigeria emerged from its second recession since 2016 in the fourth quarter of last year, but growth is fragile. The government expects a 2021 budget deficit of N5.6 trillion to be financed largely from foreign and local borrowings.