Nigeria plans to raise $2.8 billion of debt offshore as part of its 2018 budget and will explore all options to lower costs, the head of the Debt Management Office (DMO) told Reuters.

The government has laid out plans to borrow abroad even though interest rates are rising in the United States which could see the west African country pay a higher premium on this occasion compared with its most recent debt sale in February.

Nigeria, which left recession last year, approved a three-year plan in 2016 to borrow more from abroad so that 40 percent of its loans would come from offshore in an attempt to lower borrowing costs. It now has around 23 percent of its debt from abroad, up from 16 percent when it approved the plan.

The debt office has sent a request for a proposal to banks for an international bond offering, IFR reported, citing sources.

“We will explore all options keeping in mind our twin objectives of extending the tenor of the debt stock and lowering costs,” Patience Oniha told Reuters, without giving details.

Nigeria’s parliament needs to approve the new borrowing

Oniha in January said the DMO could tap capital markets or concessionary loans from the World Bank and would consider funding options after the 2018 budget had been approved.

President Muhammadu Buhari last week signed a record 9.12 trillion naira budget for 2018 into law, aimed at fostering growth in Nigeria before elections next February, in which he will seek a second term.

Growth rates in Nigeria have bounced back since the third quarter of 2016, when a recession, its first in 25 years, hit bottom. It exited that contraction last year, largely due to higher oil prices, with the country relying on crude sales for much of its revenue.

However, growth slowed in the first quarter of 2018 for the first time since pulling out of recession as its non-oil sector struggled.

Nigeria raised $2.5 billion through a dual-tranche Eurobond offering in February, selling a 12-year note at 7.1 percent to raise $1.25 billion and a 20-year tranche at 7.7 percent.

The February deal was the second international bond sale in less than three months, after the debt office raised $3 billion through an offering of 10- and 30- year bonds in November. (Reuters)