Nigeria to Start Bond Roadshow, Seek Loan From World Bank

  • Government ‘about to embark’ on bond meetings, Adeosun says
  • Nigeria to seek $1 billion World Bank loan once budget passed

Nigeria will soon meet investors before a Eurobond sale and plans to apply for a $1 billion loan from the World Bank once lawmakers approve this year’s budget, Finance Minister Kemi Adeosun said.

“We are about to embark on the roadshow” for the dollar bond, Adeosun said by phone from the capital, Abuja, on Feb. 1, without giving more details. She and Vice President Yemi Osinbajo previously said they want to raise $1 billion in what would be Nigeria’s first Eurobond since 2013.

The government hired Citigroup Inc. and Standard Chartered Bank Plc to organize the roadshow in the U.S. and London from Feb. 3, according to a person familiar with the matter. The notes and the World Bank loan will help plug a fiscal deficit forecast by the government to be 2.36 trillion naira ($7.5 billion) this year, Adeosun said separately to reporters.

President Muhammadu Buhari presented a record 7.3 trillion naira spending plan to lawmakers in December in a bid to stimulate an economy experiencing its worst downturn in more than two decades thanks to oil prices crashing since 2014 and investors fleeing the country. Gross domestic product probably shrank 1.5 percent in 2016, marking the first full-year recession since 1991, according to the International Monetary Fund.

While Nigeria sought about $4.5 billion of external funding last year, it only managed to borrow $600 million from the African Development Bank, which will be used for power generation, roads, railways and ports. The government has struggled to obtain more financing as foreign investors and the IMF have criticized its currency policies, which they say have left the naira overvalued and led to a severe shortage of the foreign-exchange businesses need to import raw materials and equipment.

The naira trades around 315 per dollar on the official interbank market and fell to a record 500 on the black market this week as the dollar scarcity worsens.

The yield on Nigeria’s $500 million Eurobond due in July 2023 snapped six days of increases to decline by 1 basis point, to 6.89 percent, by 8:41 a.m. in London.

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