By Emele Onu, 06.29.2010 

 

The Debt Management Office (DMO) has said that Nigeria will be entering the international debt market for the $500 million Euro bond before the end of October this year.The Director General of the DMO, Dr Abraham Nwankwo, told THISDAY last Monday: “We are working to raise the money before the end of October, 2010.”

 

 

The DG allayed fears expressed in some quarters that the downturn in the value of the Euro might work against the issue.“The fortune or misfortune of any foreign currency will not determine the fate of the Nigerian bond offer,” Nwankwo said. He explained: “First, the offer will be open to investors of all currency jurisdictions and second, fund managers and institutional investors usually keep a mixed portfolio of currencies.” 

 

 

The DMO boss had also stated last week at a seminar on the 2010 Budget in Lagos that the debt management authority has taken proactive steps in the management of the nation’s debt. Nwankwo pointed out that currently there is a cushioning effect against the early warning signals surrounding the fiscal regime, such as the impact of the bailout of banks and the setting up of the planned asset management company.

 

 

The 2010 budget has in- built deficit of about $20.6 billion, which is approximately 5 per cent of Gross Domestic Product (GDP). About $500 million was expected to be sourced from the global market using the Eurobond.  Some market operators had said with the erosion in the value of Euro denominated assets, exacerbated by the fact that the losses are yet to bottom out; it might be unwise for Nigeria to enter the market. The Euro, hit its four-year low relative to the dollar, amid increased concerns that Greece and other European nations could shatter and become unable to meet their debt obligations. 

 

 

Managing Director, Financial Derivatives Company Limited, Mr Bismarck Rewane, said recently, “unabated sovereign debt crisis in the euro zone is putting a strain on the potential success and value of the planned bond by Nigeria.”

 

 

But Nwankwo insisted: “Nigeria will carry on with the bond issue at the target period,” stressing that it will be a successful outing. The $500 million Eurobond was revived for issue this year after it was suspended in 2009, owing to the global meltdown. 

 

(Source:ThisDay)