(Adds details form interview)
By Chijioke Ohuocha
ABUJA, Oct 3 (Reuters) - Nigeria will issue at least a $2.5 billion Eurobond this year and is still in talks with the World Bank for concessionary loans, the head of the Debt Management Office (DMO) told Reuters on Tuesday in an interview.
Patience Oniha, director general of the Debt Management Office said Nigeria would issue $2.5 billion Eurobond which would take the proportion of its foreign debt close to 40 percent, up from 23 percent, a target its working on as part of its medium-term plan.
Nigeria expects a shortfall of $7.5 billion for its 2017 budget, which it plans to raise in foreign loans from the World Bank and from offshore markets.
Oniha said last week she was hoping to issue the bond by mid-November. The DMO is working with Citigroup, Standard Chartered Bank and Stanbic IBTC Bank on the issue.
“We would look to tap markets once conditions are favourable and pricing is right. It will start with $2.5 billion which is earmarked in the budget this year,” she told Reuters in an interview.
“Our preference is for long-term but it would staggered.”
Nigeria sold a total of $1.5 billion Eurobond in the first quarter.
Oniha said the DMO is also considering Eurobonds or syndicated loans for $3 billion to repay part of a local treasury bill holding worth 2.7 trillion naira ($8.8 billion).
“The other option is to do a bond exchange for domestic debt,” Oniha said without giving a time frame.
“It would need approval from parliament and we want to do the paperwork pending market condition.”
Nigeria’s economy grew in the second quarter, climbing out of recession as oil revenues rose, but the pace of growth was slow, suggesting the recovery remains fragile.
The debt chief said talks were ongoing with the World Bank for a $1.6 billion loan but Nigeria’s reclassification to a lower middle income country following a 2014 rebasing of its economy has capped its borrowing limit for concessionary loans.
She said some projects approved by the World Bank before the reclassification were still accessing funds.
Oniha said the DMO was looking at ways to finance infrastructure as against relying on government, citing the debut 100 billion naira sukuk issued last week.
“We want to diversify our funding so that we are not dependent on one source. We would encourage off-balance sheet financing to reduce debt and interest rate as a way to fund infrastructure,” she said.
Nigeria needs to overhaul its infrastructure, from airports to roads, bridges, power plants to help diversify its oil-depedent economy. Oniha said this would also help boost exports, government revenues and increase its ability to service debt. ($1 = 305.75 naira)
Reporting by Chijioke Ohuocha Editing by Jeremy Gaunt