Nigeria’s central bank has reported a $7.5 billion loan from U.S. banks JP Morgan JPM-N and Goldman Sachs GS-N in financial statements published for the first time since 2015, sending the country’s international bonds tumbling on Friday.
Nigeria’s government has had to seek overdrafts from the central bank to plug a widening deficit amid wide-scale theft in the oil industry, and the large foreign loans could add to the central bank’s burden.
The deal, which the central bank said meant it received cash of $7 billion from JP Morgan and $500 million from Goldman Sachs “in exchange for its securities to be held for collateral,” is first mentioned in the bank’s 2020 financial statements.
The amount is not disclosed until the 2021 and 2022 statements, but no further details are given of the loan agreement’s terms or the pledged “holdings on foreign securities.”
The West African oil producer’s notes fell as much as 2.3 cents on the dollar, with the 2030 maturity falling the most, down 2.295 cents to 83.221 cents, its lowest level in a month, according to Tradeweb data.
The bonds had surged since President Bola Tinubu took office in May and removed costly fuel subsidies and devalued the naira currency, reviving foreign investor interest in the country, which has suffered from high inflation and a soaring debt-servicing cost burden.
A spokesperson for Goldman Sachs declined to comment and JP Morgan also did not wish to discuss the matter. The Central Bank of Nigeria did not immediately respond to requests for comment.