ABUJA (SUNDIATA POST)- The federal government, through the Debt Management Office, on Wednesday announced plans to issue $500 million local bond to boost dollar liquidity.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, announced this on Thursday in Lagos at an investor meeting for the bond issuance.
Mr Edun assured Nigerians that the economy was on a growth trajectory, adding that dollar funding was critical for the exchange rate to stabilise.
According to him, it is important to have adequate foreign exchange in terms of investments and stabilising the economy.
The finance minister said though there had been improvements in the flow of foreign exchange into the economy, the dollar-denominated bond would further boost foreign exchange liquidity.
Mr Edun said this transaction aimed to improve the external reserves and support the exchange rates, which were critical elements of stabilising the economy and preparing it for investment and growth.
“The flow of dollars has improved into the economy from portfolio investors, from foreign direct investment and from multilateral mobilisations, which have bought into government’s macroeconomic reforms.
“This transaction is an important role in this process because we have a domestic issuance of dollar bonds aimed at further improving the inflow of dollars.
“The more the foreign exchange, the higher the foreign reserves, the stronger would be the exchange rate. That gives a chance for inflation to come down. The lower the inflation, the lower the exchange rate,” Mr Edun explained.
Mr Edun said the economic reforms started by President Bola Tinubu were already yielding fruits, stressing that the economy is showing signs of recovery, the output is growing, and the exchange rate is stabilising.
“Government revenues and government expenditures are totally revamped, rejigged and technology has been put in place to ensure that what belongs to government is collected diligently. There are efforts to ensure that government expenditure is carried out in a way that engenders public trust, visibility, transparency and accountability,” he said.
The minister also said that the all-important trade balances were growing positively.
Gbadebo Adenrele, the managing director of United Capital Plc and the lead advisor for the transaction, said the target was $500 million. According to Mr Adenrele, the transaction will be for five years.
He said the proceeds would be for key sectors investment to be determined by the government.
“This is the first issuance that would be done in dollars. Coupon payment is semi-annually, while the bullet repayment would be after five years. The proceeds will be invested in some key economic sectors to be approved by the president, subject to appropriation by the National Assembly.
“The minimum subscription is $10,000, with subsequent subscription of 1,000 dollars thereafter. It is backed by the full faith and credit of the Federal Government of Nigeria,” he said.
He said the offer was open to Nigerians who resided within and outside the country as well as institutional investors.
(NAN)
