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Nigeria Raises $2.2 Billion in First Eurobond Issue Since 2022 - BLOOMBERG
(Bloomberg) -- Nigeria raised $2.2 billion with its first eurobond sale since February 2022, attracting demand for more than four times the amount on offer.
Africa’s biggest oil producer offered two maturities: a 6.5-year note that priced at 9.625%, and a 10-year issue that sold at 10.375%, Nigeria’s Debt Management Office said in an emailed statement late Monday. It raised $700 million in the shorter issue and $1.5 billion in the longer-dated paper, according to the statement.
“The transaction attracted a peak orderbook of more than $9 billion,” with demand from a combination of fund managers, insurance, pension and hedge funds as well as banks and other financial institutions, it said.
African borrowers have returned to international debt markets this year after a two-year hiatus in which most governments were locked out by debt distress and the punitive cost of borrowing. The Nigerian sale follows offerings by countries including Benin, Ivory Coast, Kenya and South Africa.
Measures taken by Nigerian President Bola Tinubu’s government over the past 18 months have resulted in the yield spread of its sovereign bonds over US Treasuries narrowing by more than 153 basis points, after reaching a high of 713 basis points on Aug. 5, according to the JPMorgan EMBIG Nigerian Sovereign Index.
Since his inauguration May 2023, Tinubu has allowed a more flexible exchange rate and ended gasoline subsidies, while the central bank has embarked on an aggressive interest-rate hiking cycle in a bid to curb inflation that’s near a three-decade high. The policy measures have drawn praise from international investors as well as the World Bank and the International Monetary Fund, while triggering protests in the nation that hosts the most number of poor people globally.
Proceeds from the issue will be used to partly finance an expected budget deficit of 9.18 trillion naira ($5.86 billion) this financial year, Tinubu said in a proposal sent to lawmakers last week.
Chapel Hill Denham, Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Standard Chartered Plc acted as joint bookrunners, while FSDH Merchant Bank Ltd. was the financial adviser.
Nigeria deferred a planned $950 million Eurobond issue in May 2022 because of unfavorable yields, after raising a first tranche of $1.25 billion of seven-year paper at a yield of 8.375% in the same year. It shelved another planned issue earlier this year and instead sold dollar bonds in the domestic debt market, raising $900 million at a yield of 9.67%.
