The Debt Management Office has said that the N3.14tn bonds offered by the Asset Management Corporation of Nigeria’s bonds, which will mature in 2011 through 2013, have inherent refinancing risks.
A report by the debt office on Wednesday also disclosed that an assessment of the redemption profile indicated that there was a significant refinancing risk in the overall debt portfolio in 2011.
Refinancing risk, according to an online news media, Wikipedia, is the possibility that a borrower cannot refinance by borrowing to repay existing debt.
The report, titled, “Report of the Annual National Debt Sustainability Analysis 2011,” stated that this was due to the significant size of short term domestic debt relative to the long term securities, adding that “the longer the maturity structure of the debt instruments, the lower the refinancing risk.”
The DMO, however, said it was fine-tuning a framework for the issuance of sovereign guarantee to corporate private sector to enable them to undertake the development of commercially viable, national priority projects in the country, and relieve the government of the need to borrow to fund such projects.
Meanwhile, the Director-General, DMO, Mr. Abraham Nwankwo, said the DMO had mapped out strategies for small and medium enterprises operators to be enlightened about the opportunities that now existed in the nation’s financial market for them to gain access to stable capital and generate long term capital for their business.
Nwankwo said at a one-day workshop organised by DMO for the SMEs operators in Lagos on Wednesday that the fundamental challenges facing entrepreneurs in Nigeria was limited financing and insufficient stable and long term capital for operators to grow their business.
He said, “The traditional sources of business finance in Nigeria are largely restricted to personal savings and scare bank credits, which in themselves, are inadequate for nurturing a stable enterprise. So any business that wishes to grow requires a great deal of stable enterprise and long term.”
The DMO boss lamented that the small and medium business operators had fallen short of meeting their potential because of lack of debt management.
Source: Punch/Ademola Alawiye
