Investors shun Nigeria’s $500 million Eurobond

The Financial Times of London reports that large investors are snubbing requirements of Nigeria that starts Euro today.According the report, investors are interested in how the funds in the account surplus were used.
By: NigeriaCurrentNews.Com
 
 
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Jan. 22, 2011 - PRLog -- The Financial Times of London reports that large investors are snubbing requirements of Nigeria that starts Euro today.According the report, investors are interested in how the funds in the account surplus were used. Growing concern”about the massive cash outflows of funds in Nigeria “rainy day” of oil has prompted some large investors to flee the country debut issue of international obligations, on Friday,”the newspaper said.

Although the Nigerian authorities have said there are a lot of interest in the bond of $ 500 million, the Financial Times dit”plusieurs significant funds have told the Financial Times, they are not interested in the case because of Nigeria’s financial situation and the deterioration of worries about how the government President Goodluck Jonathan has run the account surplus, which is designed to store up the oil windfall.”

The excess crude account has been established during the term of former Nigerian President Olusegun Obasanjo. According to the report in the Financial Times,”at that time there were 20 billion into the fund. But as recently as last September there were less than $ 400 million, according to public statements, which showed billion out of the account last year.”

According to Financial Times calculations,”more than $ 30 billion in sales – calculated on the difference between the market price of the budget and oil – has flowed into the account, according to officials from donor and government. The funds were used in part to regular payments to the governors of the state in which there was little subsequent control, and partly in federal spending on infrastructure. ”

The Financial Times quotes Antoon de Kler Investec’s South African base as saying “the fact that they ran down the surplus account is very worrying,” “it is difficult to know where the money goes” . “Why a country that accounts for 90 percent of its oil revenues, which experienced a sharp rise in prices, to be launched in its foreign exchange reserves? For these reasons, we do not buy the bond.”

And according to the Financial Times, he was not the only one who expressed such concerns. ”Other major international investment funds that invest in Africa, also told the FT they would not participate in the sale. Some politicians and officials have questioned why the Nigerian foreign exchange reserves have increased and the excess crude account has not increased over the last year of rising oil prices.”

$ 16 billion is what Nigeria is supposed to have won in revenue windfalls in 2010”,” These figures, according to the Financial Times based on information technocrats working in the administration of Nigeria and the calculations are based on production”de the 750 barrels of oil with oil prices averaging $ 21 higher than the budgeted $ 60.”

Finance Minister of Nigeria, Olusegun Agang, the FT said that in addition to some of that money goes to the country partners of joint venture, the pays”a spent largely on oil production last year and on clearance of arrears to pétrolières”ajoutant companies that”the government has also partially funded the budget deficit out of the account surplus to reduce domestic borrowing.”

Sources effort to go to Mr. Agang for his reaction to the story in the Financial Times have so far been unsuccessful even though we’ll keep trying.
http://www.nigeriacurrentnews.com/investors-shun-nigeria%...

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