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Nigeria Considering $1B Eurobond as Oil Revenue Uncertain

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ABUJA, Nigeria - Nigeria may issue a $1 billion eurobond next year, the finance minister said, as uncertainty over oil prices spurs Africa's top crude exporter to find new funds for public works projects.

In 2013, Nigeria will likely ramp up sales of local currency bonds and issue a dollar-denominated note, Finance Minister Ngozi Okonjo-Iweala said in interview Nov. 16 in the capital, Abuja.

"We are planning to look at a eurobond issue for next year," she said. "It could be about a billion [dollars.]"

Nigeria is expected to try to capitalize on the recent inclusion in the JPMorgan Government Bond Index. This month, Standard & Poor's followed Fitch Ratings in upgrading Nigeria's credit rating. Both agencies now rate the West Africa country at three levels below investment grade.

Nigeria's move into dollar-denominated notes comes as growth swells and oil exports enter an uncertain phase. Nigeria's economy is set to expand 7.1 % this year, with growth above 6% through 2017, the International Monetary Fund projects.

The outlook for Nigeria's oil sector, which provides 72% of state revenue, is somewhat dimmer, the minister said. Exports to the U.S.--long the biggest importer of Nigeria's crude--have faltered, as U.S. domestic oil production surges. The largest buyer of Nigerian crude is now India, the minister said, but growth there is also slowing.

For Nigeria's struggling airlines, Mrs. Okonjo-Iweala's ministry is also looking to help Nigeria's Aviation Ministry extend credit for new airplane purchases, the finance minister said. All three of Nigeria's top airlines have been grounded amid debt and dysfunction this year, two permanently.

"We can support them to acquire" new aircraft, she said. "But the issue is designing a system where they have to pay back, with interest. This is not a grant or free funds."

Copyright (c) 2012 Dow Jones & Company, Inc.

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