Reps Approve Upward Review Of Diaspora Bond To $300m

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The House of Representatives, on Tuesday, approved President Muhammadu Buhari’s request to increase the Diaspora Bond from $100 million to $300 million as part of the Federal Government’s borrowing plan.

The approval was given during the consideration of the report of the Hon. Garba Shehu Sarkin Noma-led Ad hoc committee, mandated to work on the presidential request at the Committee of the Whole presided over by the Deputy Speaker, Hon. Yusuf Lasun, yesterday.

According to the report, the Diaspora Bond, which was captured in the federal government’s external borrowing plan 2016-2018 is a means of diversifying the sources of government funding for capital projects in priority areas such as roads, railways and power.

In addition, the diaspora bond reduces the interest cost of government’s borrowing as it is an inexpensive way to raise funds for developmental projects.

In January 2011, Nigeria issued €500 million bond to announce its entrance into the international capital market for a tenor of 10 years, issued at the rate of 6.75 percent, with the subscription rate at 260 percent.

This was followed by another successful float of €1billion bond in July 2013 which was in dual tranches of €500 million bond each.

The first tranche of €500 million bond in 2013 was for a tenor of five years, issued at the rate of 5.125 percent, with the subscription rate at 346 percent.

The second tranche of €500 million bond was for a tenor of 10 years, issued at the rate of 6.375 percent and at a subscription rate of 445 percent.