President Goodluck Jonathan has sent a request to the National Assembly to approve an increase in the amount to be raised through the Diaspora Bond by 200 percent from an initial $100 million to $300 million.
The request is contained in a letter the president sent to the Senate President, David Mark, upon resumption of the Senate from its Christmas recess.
The letter said the $100 million Diaspora Bond was part of the $9 billion approved by the National Assembly in the 2012-2014 Medium Term External Borrowing Plan.
The bond which is to be issued in the International Capital Market (ICM) is to enable the government raise funds from Nigerians in the Diaspora, to finance development projects in priority sectors of the economy.
The president said that the request for an increment was premised on the high level of interests in the Diaspora Bond.
“The process for the issuance of the bond has commenced, with the advertisement of requests for proposals for transaction parties for the offering.
“From engagements with Nigerians in Diaspora and the enquiries received since the publication of the requests for proposal, there is a high level of interest in the Diaspora Bond. There is an indication that the $100 million could be inadequate, relative to the demand expected from investors for the bond,” the president wrote.
He enumerated the advantages of the increment to include that allotments would be made to more Nigerians in Diaspora than would have been possible with a lower amount.
“This will provide an opportunity for them (the Nigerians) to participate in the development of the country, while earning returns on their investments. The issuance of a lower amount could result in the rejection of subscriptions, which would be a disappointment for Nigerians in Diaspora, after heeding the call to support the growth of their country,” Jonathan said.
He said that in addition, it would provide the opportunity to invest the funds raised from the bond in a project with a higher value, which would have a greater impact on the economy.
The president also noted that the cost of issuance as a percentage of the funds raised would be much lower, since some cost would be the same, regardless of the issued amount.
Nigeria returned to international debt markets for the first time in two years in July, 2013 issuing $1 billion in Eurobonds to fund power projects in an economy set to grow 6.7 percent this year, according to the World Bank.
When the Diaspora bond was announced in August, the Debt Management Office (DMO) said the funds would be used to finance capital projects.
Nigeria’s outstanding public debt stock was N8.3 trillion as of Sept. 30, with external borrowing accounting for N1.3 trillion of the amount, according to the agency.
The yield on Nigeria’s $500 million in Eurobonds due July 2023 declined seven basis points, or 0.07 percentage points, this month to 5.85 percent by the close in London Monday, the lowest since Nov. 7.
|Disclaimer: Opinions expressed here are those of the writers and do not reflect those of Peacefmonline.com. Peacefmonline.com accepts no responsibility legal or otherwise for their accuracy of content. Please report any inappropriate content to us, and we will evaluate it as a matter of priority.|