The Federal Government will redeem a $500 million Eurobond this month (July) as Nigeria continues to battle multiple economic challenges.
Data from the Debt Management Office (DMO) indicate a $500 million Eurobond loan is due for repayment this month in line with its terms.
The bond was obtained 5 years ago at a coupon rate of 6.375% per annum. Nairametrics understands Nigeria may have repaid the bond or has lined up the funds already.
Eurobond debts are typically paid out of the country’s external reserves or via a special fund designated for external bond repayments.
The external reserves have fallen by about $3 billion this year as crude oil sales continue to dwindle. There has also been a paucity of attracting foreign portfolio investments, further impacting cash flow.
However, the country’s ability to repay the debt was never in doubt despite the reduction in reserves.
This is also not the first time Nigeria is repaying a Eurobond following the 2018 and 2021 and 2022 repayments. Last year the country repaid $300 million and in 2021 it repaid $500 million.
Nigeria continues to operate a zero percent default rate at a time when fellow sub-Saharan countries like Ghana have defaulted and renegotiated loan terms.
The country’s ability to service the debt could also be related to the staggered spread of the repayments which makes it compatible with the country’s cash flow.
