Acting President, Yemi Osinbajo has sought the approval of the National Assembly for the issuance of $500 million Eurobond to address the deficit in the 2016 budget.

The request follows the recent issuance of $1billion Eurobond, which was eight times oversubscribed, in the international market.

Osinbajo, in a letter to the Speaker of the House of Representatives, Hon. Yakubu Dogara, read at plenary yesterday, said the government wished to take advantage of favourable market conditions, to issue the fresh debt instrument to fund the 2016 budget.

The proceeds are to be used as funding sources to finance the budget deficit, including the capital components of the budget which ends in May 2017.

The issuance is planned to hold between February and March 2017, subject to market conditions, in order to meet with the approved capital expenditure funding plan, he said.

Osinbajo, however, noted that the terms and conditions of the Eurobond, may be determined at the point of issuance, being a market-based instrument.

“It is important to note that the previous issuances of $500 million, $1 billion (consisting of two tranches of $500 million) and $1 billion in January 2011, July 2013 and February 2017, respectively, were issued at coupons of 6.75 per cent, 5.125 per cent, 6.375 per cent and 7.875 per cent based on the prevailing market conditions", the letter read.

Acting president gave the assurance that Debt Management Office (DMO) and federal government’s appointed Transaction Parties to the issue are committed to securing the best terms and conditions for Nigeria.

"Your timely response would be most appreciated in order to facilitate the prompt completion of the Eurobond Issuance",

the acting president said.

The letter read further: “The Speaker may wish to refer to Line Items 229 and 244 of the Federal Government of Nigeria Appropriation Act, which provided for a Deficit of N2,204.742 billion and New Borrowings of N1,818.675 billion, respectively.

“The Act also provided for domestic borrowing of N1.182.769 trillion and external borrowing of N635.877 billion in Line Items 245 and 246 respectively.

“You may also wish to note that while the approved domestic borrowing has been fully incurred, the N635.877 billion for external borrowing has not been fully accessed.

"The external borrowings incurred to date consist of $600 million from the African Development Bank and $1 billion Eurobond from the International Capital Market (ICM) only. 

"Thus based on the 2016 Appropriation and applying the average exchange rate, there is headroom to access further international funds.”

Thisday