Wednesday, November 22, 2017 9:20AM /FBNQuest Research
domestic debt stock amounted to N12.50trn (US$40.8bn) at end-September,
equivalent to 12.3% of 2016 GDP. The increase of N470bn in Q3 is largely
accounted for by a rise of N290bn in the stock of FGN bonds and Nigeria’s
maiden sukuk issuance of N100bn.
The domestic debt
stock/GDP ratio is very healthy for a sovereign rated B+/B. It is a core
element of the FGN/DMO narrative in the current Eurobond roadshow. Investors
will see that the stock has nonetheless grown by N5.47trn in just four years.
expand federal into public domestic debt, we have to add: the bank borrowings
of state governments, which the DMO estimated at N3.18trn at end-June, their
outstanding bonds, the bonds issued by AMCON, and the debts of the NNPC and
other public agencies.
is also the grey area of FGN debts to contractors and other private- sector
players incurred by the previous administration and unearthed by the finance
ministry last December. The total was initially estimated at N2.2trn although
we have seen figures up to N3.4trn. These claims are to be verified and then
securitized. Their inclusion would push up the public domestic debt stock to
around 25% of 2016 GDP.
is the worst-case scenario. In line with established practice, it excludes the
CBN’s many credit lines and the FGN’s contingents such as guarantees.
FGN has the approval of the National Assembly to refinance maturing NTBs into
short-term external debt up to a ceiling of US$3bn. The modalities are still
under discussion but there are obvious benefits for the overall debt service
burden as well as yields on naira-denominated FGN paper.