FEC APPROVES REFINANCING OF OF DOMESTIC DEBTS BY EXTERNAL BORROWING

The Federal Executive Council has approved the refinancing of part of the country’s domestic debt through external borrowing.

Minister of Finance, Mrs. Kemi Adeosun, who disclosed this after the Federal Executive Council (FEC) meeting, allayed fears of increased borrowing, insisting that instead of borrowing Naira, “we are now borrowing dollars and at a cheaper rate.”

The approval followed a proposal by the Debt Management Office (DMO) for the refinancing of part of the country’s domestic debts, particularly Nigerian Treasury Bills (NTBs), through the borrowing of $3 billion.

The move is informed by the lower US Dollar interest rates in the International Capital Market (ICM), with Nigeria expected to borrow at a rate not higher than 7%, while issuances of the NTBs in the domestic market are at rates as high as 18.53%, which means that external borrowing is cheaper by about  12%. Analysts agree that the implementation of the refinancing will result in substantial cost savings for the FGN in debt service costs.

Besides reducing the cost of borrowing, the $3 billion is expected to be raised for a tenor of up to 15 years, which is very long compared to the maximum tenor of 364 days for NTBs. This move will effectively extend the tenor of the government’s debt portfolio. The longer tenor enables the Government to repay at a time when the economy would be stronger and more diversified, to meet the obligations.

The reduction in the level of the FGN’s borrowing from the domestic market would result in a reduction in domestic interest rates and free up borrowing space in the economy, particularly for private sector borrowers.

The $3billion from the refinancing will also represent an injection of foreign exchange into the economy which will boost the country’s external reserves.

The approval of the National Assembly will be obtained for the proposed refinancing before implementation in line with the Debt Management Office, Act 2003.

FG OFFERS MONTHLY SAVINGS BOND AT 13.535%, 14.535% FOR RETAIL INVESTORS

The Federal Government has offered for subscription two-year and three-year Savings Bonds to investors at 13.535 per cent and 14.535 per cent, respectively from Monday, August 7 to Friday, August 11, 2017.
A statement from the Debt Management Office (DMO) said the two-year bond will be due in August 2019, while the three-year bond has a maturity date of August 2020.
The offer has a minimum subscription of N5,000 with increases thereafter  in multiples of N1,000 up to a maximum subscription of N50 million.
According to the DMO, the bond is backed by the full faith and credit of the Federal Government, with quarterly coupon payments to bondholders.
The DMO stated that the savings bond will help broaden the country’s funding base.
The FGN Savings Bond is targeted primarily at retail investors to enable them contribute to the development of the country, while also earning good returns on a safe investment in a Sovereign instrument.
The FGN Savings Bond was launched by the DMO in March 2017 and is issued every month through stockbroking firms trading on the Nigerian Stock Exchange.
The FGN Savings Bond is promoting the savings culture in the country and enhancing financial inclusion.
Since its introduction in March, the FGN Savings Bond has attracted a lot of new investors to the FGN Securities market with its attractive features.
The income earned on the FGN Savings Bond is exempted from taxes and it can be traded in the secondary market on the Nigerian Stock Exchange.

ONIHA: NEW ERA BEGINS AT DMO

The economy of Nigeria is set to be exposed to a fresh chapter of growth and development that will be as challenging as it will be rewarding with the appointment of Ms. Patience Oniha as the new Director-General of the Debt Management Office (DMO), the agency of government put in place to oversee and manage public debt.

Ms. Oniha began her career at Icon Limited Merchant Bankers in 1986, during which time she rose to the position of a Manager, before joining First Securities Discount House Limited (now FSDH Merchant Bank Ltd.) as a pioneer staff in 1992. She rose to the position of General Manager/Director before joining Ecobank Nigeria Limited in 2000. Between 2004 – 2008, Ms. Oniha was in Standard Chartered Bank Nigeria Ltd. as a General Manager.

After a fulfilling career in the banking sector spanning over 22 years, she left after acquiring skills in Credit, Marketing, Treasury and Investment Banking.  Ms. Oniha made a career move to the public sectors when she joined the DMO in 2008 as Director, Market Development Department. In this capacity, Ms. Oniha brought her banking experience to bear on various aspects of the DMO’s activities.

Amongst her achievements during her 8 years at the DMO was the introduction of Benchmark Bonds to develop the domestic bond market in order to improve liquidity and to create a sovereign yield curve which created opportunities for State Governments, Multilaterals and corporates to raise long term funds. The purpose behind this drive was to create a debt capital market where the public and private sectors can access long term funds to finance Nigeria’s growth and development. For sustainable development of the debt capital market, she actively engaged with local and foreign investors, regulators and other stakeholders to develop a large and diversified investor base for FGN Securities and Bonds issued by other borrowers.

Oniha recorded quite a number of “firsts” during her time in DMO as she managed the successful issuance of Nigeria’s debut USD500 million Eurobond in January 2011. The debut Eurobond opened a new source of funding for the Federal Government and Corporates. Thus, it was not a surprise when in 2013, she also managed the issuance of the dual-tranche USD1 billion Eurobond which was subscribed to the tune of about 400%. A number of Nigerian banks also tapped into this funding window by issuing Eurobonds. She was also responsible for the inclusion of FGN Bonds in the J.P. Morgan Government Bond Index – Emerging Markets (GBI – EM) in October 2012 which made Nigeria the second country in Africa, after South Africa to have its local currency sovereign bond included in the Index. The inclusion of FGN bonds in this Index attracted foreign investors to the domestic bond market as a whole. This was followed by the inclusion of FGN Bonds in the Barclays Capital Emerging Markets – Local Currency Government Bond Index (EM – LCBI) in March 2013.

While still at the DMO, Ms. Oniha was appointed as pioneer Head of the Efficiency Unit at the Federal Ministry of Finance. To execute the mandate of the Unit which was to moderate government’s Overhead Expenditure and generate savings from the procurement process, Ms. Oniha leveraged on her experience and global best practice to introduce a number of initiatives. Amongst them were the issuance of 7 Circulars to control expenditure on specific Overhead items and the negotiation of discounts with airlines. These delivered savings estimated at N17 billion to the Government. She was working on the introduction of new processes for payment and procurements when she was appointed Director-General of DMO with effect from July 1, 2017.

This lady of distinction bagged a B.Sc. Economics, First Class Honours from the University of Benin in 1983 and went on to earn an M.Sc. Finance from the University of Lagos in 1985. She widened her scope and horizon by becoming a member of the Institute of Chartered Accountants of Nigeria in 1990 and a Fellow in 2008. Ms. Oniha is also an Associate Member of the Chartered Institute of Taxation of Nigeria.

In recognition of her antecedents and as a resourceful and result oriented person, the news of her appointment was welcomed by Stakeholders with statements such as: Since your student days, it was clear to those of us who knew you that you were destined to excel in Scholarship, Career, Profession and be a great woman of distinction; Congratulations on this well-deserved appointment and for flying the flag for us women; This is a most well deserved promotion. Well done; You truly distinguished yourself at the Efficiency Unit; The Country will benefit immensely from your tenure; I thank God for the excellent spirit and service you have been rendering; I definitely know you will serve the country better once more; Your appointment was indeed expected, having been part of the success story of the DMO. I must also commend you on your numerous achievements during your stay as the Head, Efficiency Unit of the Finance Ministry. The foundation you have built will serve as a template to be adopted by State, Local and other arms of government.

 

Oniha’s performance at the DMO between 2008 and 2015 are a testament to her hard work and dedication towards the betterment of Nigeria. Her emergence as Director-General, Debt Management Office, recognizes her professional knowledge, notable focus and bold, unassuming approach – qualities needed to provide critical leadership to a hugely important agency in a period where growth and development need to be achieved in spite of economic challenges facing the country.

Johnson wrote in from Channelkoos.com