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Nigeria: Federal Lawmakers Approve $300m Diaspora Bond

Source: thewillnigeria.com
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BEVERLY HILLS, April 19, (THEWILL) – The House of Representatives has unanimously supported President Muhammadu Buhari’s request to increase the Diaspora bond from $100 million Euro bond to $300 million Euro bond.

The resolution was passed on Tuesday following the approval of the recommendations by the Adhoc Committee on the request for an increase in the amount to be raised through the Diaspora Bond from the international market.

The approved bond, given at the Committee of Whole, Chaired by Yussuff Lasun, Deputy Speaker of the House, was captured under the 2016-2018 Federal Government External Borrowing Plan approved by the National Assembly.

In its report, the ad hoc committee of the House chaired by Babangida Ibrahim declared that the Diaspora bond was a major means of diversifying the sources of government funding and taking advantage of the large Diaspora population of Nigerians.

The report added that the Diaspora bond reduces the interest cost of Government’s borrowing, as it is an inexpensive way to raise funds for developmental projects adding that proceeds of the issuance would be used to finance capital projects in priority sectors of the economy such as roads, railways, power projects among others.

Nigeria made its debut entry into the international capital market in January 2011 by the issuance of $500 million Euro bond and subsequently floated another $1 billion Euro bond in July 2013.

The first $500 million Euro bond was for a tenor of 10 years and issued at the rate of 6.75 percent, with the subscription rate at 260 percent while the second issuance of $1 billion Euro bond in 2013 was in dual tranches of $500 million Euro bond each.

The first tranches of $500 million Euro bond in 2013 was for a tenor of five years and issued at the rate if 5.125 percent, with the subscription rate at 346 percent while the second tranche of $500 million Euro bond was for a tenor of ten years, issued at the rate of 6.375 percent and at a subscription rate of 445 percent.

Story by David Oputah