Eurobond fails to lift reserves as more borrowing underway

The $1.25bn Eurobond Nigeria issued in March this year failed to shore up the country’s external reserves, which dropped by 2.15 percent year-to-date, even as the federal government plans more external borrowing, BusinessDay findings show.

External reserves dropped to $39.64 billion on April 27, 2022 from $40.15 billion on January 4, 2022, according to data from the Central Bank of Nigeria (CBN).

Lower oil production despite high crude oil prices led to limited foreign currency inflows needed to boost the reserves.

Rising import bill continued to exert pressure on external reserves and this is expected to continue into the year, said FSDH Research.

Foreign exchange reserves, according to the CBN, are assets held on reserve by a monetary authority in foreign currencies. These reserves are used to back liabilities and influence monetary policy. They include foreign banknotes, deposits, bonds, treasury bills and other foreign government securities.

Nigeria is considering a bond sale targeted at its citizens overseas to raise funds to help Africa’s biggest economy narrow its budget deficit, according to a Bloomberg report.

Patience Oniha, director-general of the Debt Management Office, said the Federal Government might sell the debt after it repays $300 million of diaspora bonds maturing in June.