Foreign investors stake $7.8bn on Nigeria’s $1bn Eurobond

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Ifeanyi Onuba, Abuja

After series of delays, the Federal Government on Thursday released the pricing of its $1bn Eurobond, disclosing that the bond was approximately eight times oversubscribed with orders in excess of $7.8bn.

The subscription rate was contained in a statement by the Director of Information in the Federal Ministry of Finance, Mr. Salisu Dambatta.

The statement said the bond would bear an interest rate of 7.87 per cent, adding that it would be repaid after 15 years on February 16, 2032.

The pricing of the bond, according to the statement, was determined following a roadshow to key global financial centres led by the Minister of Finance, Mrs. Kemi Adeosun; Minister of Budget and National Planning, Senator Udo Udoma; and Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele.

Others are the Director-General of the Debt Management Office, Dr. Abraham Nwankwo; and the Director-General, Budget Office of the Federation, Mr. Ben Akabueze.

The statement read in part, “The Federal Republic of Nigeria today (Thursday) announces that it has priced its offering of $1bn aggregate principal amount of notes under its newly established $1bn Global Medium Term Note programme.

“The Notes will bear interest at a rate of 7.875 per cent and will mature on February 16, 2032, with a bullet repayment of the principal. The Republic (of Nigeria) intends to use the proceeds of the notes to fund capital expenditures in the 2016 budget.

“The Notes represent the Republic’s third Eurobond issuance, following issuances in 2011 and 2013. The Notes were approximately eight times oversubscribed with orders in excess of $7.8bn, compared to a pre-issuance target of $1bn, demonstrating strong market appetite for Nigeria.”

The statement said despite continued volatility in emerging and frontier markets, the oversubscription of the bond was a demonstration of the confidence by the international investment community in Nigeria’s economic reform agenda.

It explained that the offering attracted significant interest from leading global institutional investors, adding that the bond would be admitted to the official list of the United Kingdom Listing Authority and available to trade on the London Stock Exchange’s regulated market.

It added that the $1bn Eurobond would be eligible for trading and also listed on the Nigerian FMDQ OTC Securities Exchange and the Nigerian Stock Exchange.

The statement quoted Adeosun to have said, “Nigeria is implementing an ambitious economic reform agenda designed to deliver long-term sustainable growth and reduce reliance on oil and gas revenues, while reducing waste and improving the efficiency of government expenditure.

“At the heart of the agenda is a commitment to invest in developing Nigeria’s infrastructure through a target 30 per cent annual budget commitment to capital expenditure.

“We are establishing the building blocks for long-term growth and making the hard decisions that must be made to reset our economy appropriately.”

In his comments, Nwankwo said with the issuance of the bond, the country had extended the tenor of its borrowing programme in the international capital markets to 15 years.

his, according to him, is done at a price that reflects belief in the quality of Nigeria’s cash flows and government.

The statement quoted him to have said, “Nigeria is delighted to have successfully priced its third Eurobond issue.

“We have successfully extended the tenor of our borrowing programme in the international capital markets to 15 years at a price that reflects belief in the quality of Nigeria’s cash flows and government.”

Nwankwo added that the Eurobond was the latest step in a broader debt strategy designed to significantly re-balance Nigeria’s debt profile towards longer term financing and reduce the burden of interest on the country’s annual budget.

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