Members of the House of Representatives on Tuesday unanimously supported President Muhammadu Buhari’s request to increase the Diaspora bond from $100 million Euro bond to $300 million Euro bond.
The approved Euro bond was captured under the 2016-2018 Federal Government External Borrowing Plan approved by the National Assembly.
The resolution was passed following the adoption of the recommendations of the Adhoc Committee on the request for an increase in the amount to be raised through the Diaspora Bond from the international market, at the Committee of Whole, chaired by Yussuff Lasun, deputy speaker of the House.
The ad hoc committee of the House chaired by Babangida Ibrahim observed that the Diaspora bond was a means of diversifying the sources of government funding and taking advantage of the large Diaspora population of Nigerians.
The report also indicated that Nigeria made its debut entry into the international capital market in January 2011 by the issuance of $500 million Euro bond and subsequently, successfully floated another $1 billion Euro bond in July 2013.
According to report, the first $500 million Euro bond was for a tenor of 10 years and issued at the rate of 6.75 percent, with the subscription rate at 260 percent.
The report of the committee equally stated that the second issuance of $1 billion Euro bond in 2013 was in dual tranches of $500 million Euro bond each.
The first tranches of $500 million Euro bond in 2013 was for a tenor of five years and issued at the rate if 5.125 percent, with the subscription rate at 346 percent.
The report also maintained that second tranche of $500 million Euro bond was for a tenor of ten years, issued at the rate of 6.375 percent and at a subscription rate of 445 percent.
As part of Federal Government’s external borrowing plan of 2012-2014, National Assembly approved the $100 million Diaspora bond raised from the international capital market.
The House Committee on Aids, Loans and Debt Management during the seventh assembly, considered and recommended for approval the request for an increase in the issuance amount from $100 million to $300 million.
The report added that the Diaspora bond reduces the interest cost of Government’s borrowing, as it is an inexpensive way to raise funds for developmental projects.
The report also indicated that proceeds of the issuance would be used to finance capital projects in priority sectors of the economy such as roads, railways, power projects among others.
