Culled—Proshare
April 16, 2020
By FBNQuest Research
Total debt service on the FGN’s external obligations amounted to US$1.33bn in 2019 including US$250m in the fourth quarter. (Payments were considerably higher the previous year because the FGN declined to refinance a sovereign Eurobond that matured in Q3 2018.) In normal times, however defined, this burden should not be overly onerous for a country managing crude oil production of +/- 2.0mbpd. This comfortable narrative is currently under threat from the crashing oil price and coronavirus pandemic. 
Based upon annual interest and fee payments in the 12 months to December and the stock of debt as at end-June, we calculate the average borrowing cost from the World Bank Group at 0.9%, the African Development Bank Group at 2.3% and Exim Bank of China at 2.7%. For the FGN’s commercial obligations, the average works out at 7.1%.
The quarter was light in principal repayments, which amounted to US$40m.
On Tuesday G7 finance ministers and central bank governors supported a “time-bound suspension on debt service payments due on official bilateral claims for all countries eligible for World Bank concessional financing”. Nigeria would appear to qualify because it borrows from the Bank’s soft window (the International Development Association).
Nigeria’s bilateral debt service was not crushing last year (US$170m).
Total external debt service (FGN and states; US$ millions)
Sources: Debt Management Office (DMO); FBNQuest Capital Research
G7’s support is conditional upon the agreement of G20, and there are hopes of a sign-off at the Fund/Bank spring meetings this week. However, G20 is said to feel that it should ask “private creditors to provide comparable treatment, on a voluntary basis”. The FGN would like to maintain its access to the Eurobond market and may feel uncomfortable with such a request.
