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Nigeria holds investors meetings on Eurobond offer - NIGERIAN TRIBUNE

SEPTEMBER 20, 2021

Of the total value, 83.07% was held by the Federal Government while the 36 states and the Federal Capital Territory (FCT) borrowings accounted for 16.93%

By Chima Nwokoji, Nigerian Tribune

THE Federal Government of Nigeria through the Debt Management Office (DMO) is holding its second meeting in order to avail local investors the opportunity to invest in Eurobonds.

The country’s national debt stock hit N35.5 trillion at the end of June 2021, data from the Debt Management Office (DMO) revealed. The new figure is 7.75 per cent higher than the N32.9 trillion recorded at the close of last year.

According to the Director-General of the DMO, Patience Oniha, the external debt accounted for N13.7 trillion or 38.7 per cent while approximately N21.8 trillion was sourced from the local market.

Of the total value, 83.07 per cent was held by the Federal Government while the 36 states and the Federal Capital Territory (FCT) borrowings accounted for 16.93 per cent.

The Federal Government of Nigeria announced plans for a Eurobond issuance in the International Capital Market (ICM).

The last time Nigeria accessed the ICM was November 2018. Information from DMO disclosed that virtual meetings with investors have been scheduled for September 17 and September 20, 2021

This is the first time local investors would be included in the roadshows, and this is one of the reasons why a Nigerian Bookrunner (Chapel Hill Denham Advisory Services Ltd) was appointed as one of the transaction advisers.

Through the Eurobond issuance, Nigeria is expected to raise up to $3 billion but no more than $6.2 billion. The issuance, for which all statutory approvals have been received, is for the purpose of implementing the new external borrowing in the 2021 Appropriation Act.

Proceeds are for the financing of various projects in the Act. In addition to providing funding to part-finance the deficit in the 2021 Appropriation Act, experts say the issuance of Eurobonds by Nigeria benefits the country in many other strategic ways; amongst which are:

“It is an inflow of foreign exchange, leading to an increase in external reserves. External reserves help support the Naira exchange rate, and Nigeria’s sovereign rating.

“When Nigeria raises funds externally, through Eurobonds, it frees up space in the domestic market for the private sector and sub-national borrowers. In effect, it helps the sovereign not to crowd out other borrowers in the domestic market,” analysts at Proshare stated.

The issuance of Eurobonds by Nigeria has opened up opportunities for Nigeria’s corporate sector, notably banks, to issue Eurobonds to raise capital in the ICM.

By doing so, their capital base has been strengthened to provide banking services whilst also meeting regulatory requirements.

Nigeria has a sovereign yield curve in the ICM, extending up to 30 years.

The local listing of Nigeria’s Eurobonds on the Nigerian Exchange Ltd. and the FMDQ Securities Exchange Ltd., have increased the range of products on these two exchanges and their respective market capitalization.

Overall, Eurobond issuances by Nigeria and the investor meetings that precede the pricing, have provided a strong global platform for Nigeria to tell its own story and opportunities available in Nigeria for investors.


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