Nigeria Raises $4bn through Eurobonds

In what is a signal of investor confidence in its economy despite headwinds, Nigeria has raised $4 billion through Eurobonds, an amount that was raised after an intensive two days of virtual meetings with investors across the globe.

The Debt Management Office (DMO) in a statement, Tuesday, explained that the Order Book peaked at $12.2 billion, which enabled the Federal Government of Nigeria (FGN) to raise $1 billion more than the $3 billion it initially announced.

I“This exceptional performance has been described as, ‘one of the biggest financial trades to come out of Africa in 2021’ and ‘an excellent outcome,” the DMO said.

Bids for the Eurobonds were received from investors in Europe and America, as well as Asia, even as there was good participation by local investors.

The DMO noted that the size of the Order Book and the quality of investors demonstrates confidence in Nigeria.

The Eurobonds were issued in three tranches, details, namely seven years–,$1.25 billion at 6.125 per cent per annum; 12 years -$1.5 billion at 7.375 per cent per annum as well as 30 years -$1.25 billion at 8.25 per annum

The long tenors of the Eurobonds and the spread across different maturities are well aligned with Nigeria’s Debt Management Strategy, 2020 –2023, the DMO said.

It stressed that since the Eurobonds were issued as part of the New External Borrowing in the 2021 Appropriation Act, the raising of $4 billion through Eurobonds

provides a significant amount of funds to finance projects in the Act, thus contributing to the implementation of the 2021 Appropriation Act.

Nigeria returned to the International Capital Market (ICM) three years after its last outing in 2018, when it floated a $2.5 billion aggregate Eurobonds under its Global Medium Term Note Programme.

The DMO had stated that in addition to providing funding to part-finance the deficit in the 2021 Appropriation Act, the issuance of the Eurobonds would benefits the country in many other strategic ways.

According to the DMO, it would also bring about an inflow of foreign exchange, leading to an increase in external reserves to help support the naira exchange rate as well as Nigeria’s sovereign rating.

It further explained that when Nigeria raised funds externally through Eurobonds, it freed up space in the domestic market for private sector and sub-national borrowers.

The debt management body stated, “In effect, it helps the sovereign not to crowd out other borrowers in the domestic market. 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.”