Nigeria’s Niger state plans to seek bondholders’ approval next month to restructure its 21 billion naira ($74 mln) worth of debt, its adviser said on Thursday, as it seeks ways to ease strains caused by a plunge in crucial oil revenues.
Niger, which lies in northwestern Nigeria and is home to around 4 million people, plans to meet bondholders on July 28 to approve an extension to its five-year debt due in 2018 to 2023 and an increase of its coupon from 14 percent to 16 percent.
Several Nigerian states borrowed in the domestic bond market and from banks to fund infrastructure projects when oil prices were much higher in mid-2014. But as crude prices dropped, many states have become unable to pay bills or salaries.
“The bond will be restructured by extending the maturity date of the bond by five years to mature in 2023, with payment of the principal amount still being a semi-annual amortized payment,” United Capital said in a notice to bondholders.
Nigeria’s 36 state governments borrowed money this month from the federal government to augment their monthly income and cover salary payments after they deferred loan deductions for March.
They also received financial help from the central bank and Debt Management Office last year to clear a backlog of unpaid salaries and other expenses.
Niger state issued its bond in 2014 to fund infrastructure projects, including roads and the construction of 500 housing units, it said when it was marketing the bond.
In April the federal government said nearly two-thirds of states were struggling to pay salaries despite receiving a bailout.