N’Assembly Approves $500m Eurobond Issue

The National Assembly on Wednesday approved the request by the executive for the issuance of a $500 million Eurobond to fund the deficit in the 2016 budget.

A resolution of the National Assembly is a critical condition that must be met for securities issuance at the international capital market.

The proceeds of the Eurobond are to be used as funding sources to finance the 2016 budget deficit including the capital components of the budget which ends in May 2017, Vice-President Yemi Osinbajo had explained last month when he sought the approval of the legislature for the Eurobond.The Senate considered the request at the Committee of the Whole on Wednesday and voted to approve the request, immediately shortening the approval processing time.

He had informed the legislature that the issue was planned for between February and March 2017, subject to market conditions.

Similarly, the House of Representatives approved the same request of the executive to float a $500 million Eurobond.
The resolution, which was passed without opposition, however mandated the House Committee on Aids, Loans and Debt Management to monitor the disbursement of the proceeds of the Eurobond as specified in the 2016 Appropriation Act.

The House, in approving the Eurobond issue, noted that based on the 2016 Appropriation Act and applying the average exchange rate, there was still headroom to access further international funding.

It also premised its approval on the high over-subscription of the recent $1 billion Eurobond issue which had created favourable market conditions for the issuance of another foreign debt instrument of $500 million to fund the 2016 budget.

The 2016 Appropriation Act provided for a deficit of N2.20 trillion and borrowing of N1.81 trillion.
Although domestic borrowing has been accessed to the tune of N635.87 billion, that of external borrowing was yet to be fully accessed.

In another development, the Senate said it was working hard to ensure that the N7.3 trillion 2017 budget is passed by the March 30, 2017 deadline.

It however clarified that the date was not sacrosanct.
Briefing newsmen after plenary on Wednesday, Senate spokesman, Senator Sabi Abdullahi (Niger North), said the various standing committees were defending their reports before the Committee on Appropriation.

He added that the reports had already been harmonised with the committees of the House of Representatives, to avoid further delays.

“We have a timetable and we are working with it. The timetable is a guide. The challenge, as I said two weeks ago, is that several MDAs (ministries, departments and agencies of government) were invited by the committees to come and defend their budget proposals, but they were not forthcoming and this caused delays.

“In the circumstances, even if there is a delay, it will not be long. We are on course to catch up with the time,” Abdullahi said.

Speaking on the approval for the Eurobond, Abdullahi said the Senate had to waive the long process of considering the request in order to reduce the number of abandoned projects from the 2016 budget.

“The 2016 budget was approved for 12 calendar months, it was approved in March 2016, implementation should continue till the end of April,” he added.