Tinubu seeks Reps approval for fresh $2.3bn foreign loans
By Ndukaku Ihe
President Bola Tinubu has sought the approval of the House of Representatives to take fresh foreign loans totalling $2, 347, 465, 000. billion, for part financing of deficit in the 2027 Appropriation Act.
The breakdown, according to the letter, are $1,229,113,000.00 new external borrowing, at the exchange rate of USD 1 to N1500 and $1,118,352,000.00 for refinancing of Eurobonds due to mature on November 21, 2025.
Also, President Tinubu is seeking for the permission of the House to issue a stand alone “debut Sovereign Sukuk ” of up to $500 million in the International Capital Market ( ICM).
The President’ s requests were contained in an address to the speaker, Tajudeen Abbas, which were read by the latter, at Tuesday’s plenary. He explained that the fresh external borrowing could be sourced in the ICM through either the issuance of Eurobonds, loan syndications, bridge finance facility from Bookrunners and direct borrowing from International Financial Institutions.
According to him, the ” 2025 Appropriation Act provides for N9,276,348,934,935.79 as New Borrowings to part-finance the 2025 Budget Deficit, of which N1,843,669,786,987.16 (equivalent of about USD1,229,113,000.00 at the Budget Exchange Rate of USD1.00/N1,500.00) is specified as New External Borrowing.
“The House of Representatives is kindly invited to issue its Resolution allowing the Government to raise the amount through any of the following options: Issuance of Eurobonds, Bridge Finance Facility from Bookrunners, Loan Syndication and Direct Borrowing from International Financial Institutions.”
President Tinubu added that “The House of Representatives may wish to note that Eurobonds of USD1,118,352,000.00 (7.625% US$1.118BN NOV 2025) issued in the ICM on November 21, 2018, with an original tenor of 7 years, will mature on November 21, 2025.
“The plan is to refinance the maturing Eurobonds through issuance of Eurobonds, Bridge Finance Facility from Bookrunners, Loan Syndication, or Direct Borrowing from International Financial Institutions, if necessary to avoid default. This is a standard practice in debt capital markets, including the ICM. The proposal is for the House of Representatives to issue its Resolution authorising the FGN to refinance the Eurobonds, accordingly.”
He explained that “the aggregate amount proposed to be raised in the ICM either through Issuance of Eurobonds, Bridge Finance Facility from Bookrunners, Loan Syndication and Direct Borrowing from International Financial Institutions or combination of the options for which Resolution of the House of Representatives is being sought is USD2,347,465,000.00.
“Whilst exploring all the options, the plan is to focus on the Issuance of Eurobonds, and we believe that Nigeria, being a regular issuer of Eurobonds in the ICM could raise the proposed amount, subject to market conditions. The House of Representatives may wish to note that because Eurobonds Issuance is a market-based transaction, the terms and conditions can only be determined at the time of the transactions, and they will be subject to prevailing market conditions.
“The Federal Ministry of Finance (FMF) and the Debt Management Office (DMO) will work with the Transaction Advisers to secure the most favourable terms and conditions.
“Meanwhile, it is expected that the pricing of the new Eurobonds will reflect the Yields on Nigeria’s Eurobonds trading in the ICM at the time of Issuance, while Tenors will be guided by investors’ preferences, price and the DMO’s liability management strategy.”
Furthermore, President, while rationalizing his request for the approval for the issuance of $500million sovereign Sukuk, explained that the Federal Government has recorded success in issuance of Sukuk in the domestic capital market for the financing of critical infrastructural projects across the country.
According to him, “between September 2017 and May 2025, the DMO has raised N1,392.557 trillion through Sukuk in the domestic capital market to fund critical road infrastructure projects. There is the need to pool resources from external sources to complement domestic issuance to help bridge infrastructure funding gaps; and,
“It is imperative to open new sources of funding for the FGN, and thereby diversify investor base, as well as deepen the FGN Securities market.
“The proposal is for the House of Representatives to approve the issuance of a stand-alone debut Sovereign Sukuk with or without credit enhancement (Guarantee) from the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), a member of the Islamic Development Bank (IsDB) Group.
“The Policy Premium for the Guarantee proposed by ICIEC is 3.5% of Issue Amount per annum. If the credit enhancement from ICIEC is taken for the proposed Sukuk Issuance, 25% of the Issue Proceeds may be used to repay relatively more expensive debt obligations of the FGN, and the balance will be used to finance the development of pre-identified infrastructure projects.”
