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Nigeria plans to go
ahead with its delayed $500 million debut Eurobond in two to three
weeks and expects a bill to create a sovereign wealth fund to pass
under the current administration, the finance minister said on Friday.

Africa’s top crude
oil exporter first announced plans to borrow in the international bond
market in September 2008 but has put the issue on hold for several
times, most recently in December, citing adverse market conditions.

“Very soon, in the
next two to three weeks, we will be going … to the market with the
$500 million Eurobond,” finance minister, Olusegun Aganga, told a
briefing with journalists, adding that roadshows were planned in the
United States and Europe.

The aim of the
10-year bond is to set a benchmark in the global market for Nigeria
rather than to raise funds, meaning the pricing is considered more
important than the timing. Nigeria, last year, appointed Deutsche Bank
and Citigroup as bookrunners for the Eurobond and named Barclays
Capital and FBN Capital, a subsidiary of Nigeria’s First Bank, as its
financial advisers. It had planned to take a roadshow to the United
States in December but postponed the issue due partly to volatility in
global markets caused by the Greek and Irish debt crises.

Analysts have grown
increasingly concerned about the state of the public finances in
Africa’s third-biggest economy, particularly as presidential and
parliamentary elections in April approach and costly campaigns get
under way. But most analysts say the relatively small size of the bond
issue, combined with appetite for high-yielding assets and a paucity of
West African debt issues, means investors would be ready to shrug off
those short-term risks. Mr. Aganga and Citi’s chief executive, Vikram
Pandit, have said they expect significant demand for the issue.

Wealth fund

President Goodluck
Jonathan has come under criticism from his main election rival, former
vice president, Atiku Abubakar, over the state of Nigeria’s finances
and plans for “excessive borrowing” in this year’s budget.

Despite higher oil
prices and output, Nigeria’s foreign reserves of $33 billion were down
almost a quarter on a year earlier by the start of December and the
2010 budget deficit is expected to have topped 6 per cent of GDP.

The Excess Crude
Account (ECA), into which Nigeria is meant to save oil revenues above a
benchmark price, has fallen to $300 million from $20 billion four years
ago.

Mr. Aganga defended
the 2011 budget – which represents a drop in approved spending over
2010 – saying the government was already taking steps to rein in
recurrent expenditure and that comprehensive audits of bodies including
state-run oil company NNPC were underway to ensure leakages were
plugged.

He said the lower
reserves were a result of maintaining a stable exchange rate in the
face of increased forex demand, spending on power projects, and the
allocation of $1 billion of seed funding for a sovereign wealth fund to
replace the ECA. A bill before parliament to create the fund should be
passed before the April elections, he said.

“I expect and hope
that we will get the bill passed before the end of this administration
… I think it will be one of our major achievements as a country,” Mr.
Aganga said.

The fund is meant
to divert more of Nigeria’s revenues towards badly needed
infrastructure development, save for future generations, and establish
a financial reserve to weather economic downturns.

It is hoped that
the fund will create a much firmer legal framework for the management
of Nigeria’s oil wealth than the ECA, disputes over whose
constitutional legality make it difficult for the federal government to
defend the savings from the country’s 36 cash-hungry state governments.

REUTERS