Nigeria seeks $2b Chinese loan to fund budget

Nigeria is currently seeking a $2billion loan from China to fund the 2016 budget.

Finance Minister Mrs. Kemi Adeosun, according to sources, will travel to China next week to that effect.

Sources said Nigeria has shelved plans to meet investors about returning to commercial borrowing on the Eurobond market.

One Nigerian government official told Reuters that any loan agreed during Adeosun’s trip could be signed by President Muhammadu Buhari in Beijing next month.

“The finance minister, in the company of the Central Bank Governor Godwin Emefiele, has planned to be in China sometime next week to conclude negotiations on the $2 billion loan,” said the official, who asked not to be named.

The official acknowledged negotiations had been underway for some time and that the terms is yet to be agreed. However, he added: “Hopefully it may be sorted out during this meeting and the loan will be signed during President Buhari’s visit to China next month.”

With world markets in turmoil, investors are wary of lending to anything but highly-rated rate emerging economies. Nigeria’s reluctance to devalue the naira, which has plunged on the black market, would further discourage investors, meaning the cost of commercial borrowing would be prohibitive.

If talks with China or multilateral agencies fail, Nigeria would struggle to find willing commercial lenders.

“It’s going to be difficult for issuers to come to market now unless they are at the high end of the credit quality spectrum,” said Zsolt Papp, client portfolio manager at JPMorgan Asset Management.