Q3 2021 Debt Data: External Debt Service Still Relatively Modest

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Wednesday, January 05, 2022 10:58 AM / by FBNQuest Research / Header Image Credit: FBNQuest Research


The DMO's latest quarterly publication on external debt service show that the FGN's external debt service obligations amounted to USD521m in Q3 '21. The sum consists of USD246m and USD275m on market and non-market debt respectively. The amount is broadly comparable to the USD507m external debt service cost for the comparable quarter of 2020. However, it is c.74% higher on a q/q basis because debt service payments tend to peak in the third (and first) quarters due to a concentration of FGN bond issuance in those quarters.    


The FGN's external debt service payments for 9M '21 totalled USD1.8bn (including a USD500m maturity in January '21), up from c.USD1.3bn for the year-earlier period.


Based on annual interest and fee payments in the nine months to Sep '21  and the stock of debt as at end-Sep, we calculate the average borrowing cost from the World Bank Group at 1.3%, the African Development Bank Group at 1.4% and Exim Bank of China at 3.5%.


For the FGN's commercial obligations, the average works out at around 6.9%.


Repayments of principal in Q3 totalled USD172m, including USD77m to the World Bank Group and c.USD58m to the Exim Bank Of China.


We see from the DMO's data for Sep. '21 that Nigeria's total stock of external debt accounted for c.41% of total public debt of slightly over NGN38trn, while external debt service accounted for just c.21% of total debt service (inc. FGN domestic debt service only).


Although Nigeria's debt-service to revenue ratio has frequently exceeded 90% in recent quarters, the proportion of external debt service costs is still relatively low, because a large component of the external debt burden (c.60%) is owed to concessional lenders such as the World Bank.


The external debt stock is set to widen further as the newly approved FY '22 budget provides for total expenditures of NGN17.1trn, and a deficit of NGN6.4trn, with c.NGN5.1trn coming from domestic and external borrowings.


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