Nigeria Pursues Dollar-Denominated Domestic Bonds To Tackle Forex Crisis, Says DMO

Nigeria is working on the details of the proposed dollar-denominated domestic bonds, which is part of overall measures by the federal government to address the foreign exchange crisis, the Debt Management Office (DMO) has confirmed.

The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun had recently announced plans to initiate the issuance of domestic bonds denominated in foreign currency in the second quarter of this year.

A Bloomberg report on Monday quoted the Director General of DMO, Ms. Patience Oniha as saying that the agency was in the process of appointing advisers and determining offer size.

The offer targets residents and institutional investors with access to foreign exchange even as bond yield will be benchmarked to comparable dollar assets.

Oniha, who reacted to a THISDAY inquiry on the impending issuance also confirmed the planned dollar-configured domestic bonds issuance via an email message.

However, she said the size, tenor and modality for pricing were yet to be determined.

She said: “Too early for a splash as details are being worked on….Yes, we are working towards issuing a USD bond in the local market but the size, tenor and modality for pricing have not been determined.

“Target investors include local residents and the Nigerian Diaspora. At this time this is all the info I can provide,” she said.

Edun had also recently disclosed at the Lagos Business School Breakfast Club that the federal government was adopting what he described as a medium-term multiple initiatives to boost the supply of ‘sticky’ foreign capital, with Presidential executive orders to boost dollar liquidity.

He listed some of the initiatives  as the Presidential directives in the oil and gas sector (as an example of sector focused intervention), repatriation of foreign denominated assets into the formal financial sector, and local issuance of foreign-denominated Federal Government Bonds, all of which are expected to be implemented in early  second quarter (Q2) of  2024

The initiatives also include oil and gas companies tax incentives, exemptions and remissions, among others  as well as local content compliance for value reduction of petroleum sector contracting costs and timelines.

Ndubuisi Francis and Nume Ekeghe

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