Monday, October 26,
2020 / 12:47 PM / by FBNQuest
Research / Header Image Credit: Business Post Nigeria
increasing share of the FGN's domestic debt consists of its promissory notes
issued to clear arrears. These amounted to N972bn (US$2.52bn) at end-September
or about 6% of the burden. After allowing for repayments already made on
maturity of N187bn, the total hit could rise to a maximum of N2.7trn, subject
to verification of claims by the DMO and the National Assembly.
There is a secondary market in the pro-notes. Some domestic
institutional investors buy the claims from the beneficiaries.
The oil marketers stopped importing petroleum products because
of the arrears, which consist largely of fuel subsidy reimbursements.
Notes have been issued for a total of N166bn for non-oil
exporters, which covers some non-payment of the export expansion grant. There
has been a trend increase in non-energy exports from US$2.56bn in 2016 to
US$10.32bn in 2019 although the negative impact of the Covid-19 virus is now
Arrears to local contractors have not yet been securitized in this programme. In the final 2020 budget we see a N8bn capital item for the FGN to settle the claims of such creditors.
Under recurrent items we
also note allocations to clear pension arrears due to military and civilian
personnel, terminal benefits to former employees of the long-defunct Nigeria
Airways and arrears in kind (vehicles owed to retirees). These allocations
approach N50bn in total.
1. Cash Injection Due for Struggling
Institutions; FGN Promissory Notes Amounted to N968bn
2. Of Dodgy Promissory Notes and MoUs - Behind The Figures
3. Nigeria's Export Expansion Grant (EEG) and FGN
Promissory Notes As Market Settlement Instruments
4. Senate Approves
Interim Report of the Ad-hoc Committee on Promissory Notes and Bond Issuance Program
5. FGN's N2.7trn
Promissory Notes to Its Creditors - Impact on Liquidity and Interest Rates
6. Moody's Withdraws
Green Bond Assessments
7. Nigerian Breweries
Plc Series 9 and 10 Commercial Paper Now Open
8. A Clear Winner
from Crashed Bond Yields
9. CBN Cuts OMO Rates
by 37bps Staying True to Their Stance
10. Summary of FGN
Bond Auction Results for October 2020