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Tuesday, April 14, 2020 /09:57 AM / by FBNQuest Research / Header Image Credit: FBNQuest


We see from the DMO's most recent quarterly release that the FGN's external debt obligations at end-December amounted to US$27.68bn, equivalent to 6.9% of 2019 GDP. (We convert at the then prevailing NAFEX rate.) The total increased by US$740m in the quarter.

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Commercial borrowings were unchanged at US$11.17bn because the FGN has not tapped the Eurobond market since November 2018 and is unlikely to do so in a hurry. The total figure includes the external borrowing of the state governments of US$4.56bn, which is necessarily guaranteed by the FGN.


In terms of financing costs, we note that 59.7% of the external debt stock is due to multilateral and bilateral creditors, principally the World Bank Group, on concessionary terms. The ratio was little different at end-June (58.5%).


The Exim Bank of China has become a larger donor creditor than the African Development Bank (AfDB) Group: US$3.18bn vs US$2.29bn. New Chinese-funded projects are on the drawing board, not least for the railways.

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Looking ahead, the 2020 budget provides for external financing of N850bn. The FGN's thinking was to raise the figure from a combination of donor partners for project support and the Eurobond market.


Global market turmoil as a result of the crashing oil price and coronavirus has removed an Eurobond issue as a credible alternative, leading the federal finance minister to appeal for support of US$6.9bn from the IMF, the World Bank and the African Development Bank.


Total: US$27.68bnFGN external debt by lender group, Sep 2019 (% shares)


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Sources: Debt Management Office (DMO); FBNQuest Capital Research



This could increase the stock/GDP ratio by up to a further 170bps although it is worth noting that: the figure for the IMF would represent 100% of its quota; and the facility said to be sought from the IMF does not incorporate a Fund-supported programme or ex-post conditionality.

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