Nigeria floats $3bn dual-tranche Eurobond to further raise funds to finance the 2017 Budget

Nigeria Monday announced that it has priced its offering of $3 billion aggregate principal amount of dual series notes under its $4.5 billion Global Medium Term Note programme, earlier set at $1.5 billion.

The Notes comprise a $1.5 billion 10-year series and a US$1.5 billion 30-year series would help raise funds to prosecute the 2017 budget and refinance domestic debts, as may be applicable.

The 10-year series will bear interest at a rate of 6.500 percent, while the 30-year series will bear interest at a rate of 7.625 percent, which in each case, would be repayable with a bullet repayment of the principal on maturity.

The offering is expected to be closed on or about 28 November 2017, subject to the satisfaction of various customary closing conditions.

The Notes represent Nigeria’s fourth Eurobond issuance, following issuances in 2011, 2013 (two series) and earlier in 2017.

The offering has attracted significant interest from leading global institutional investors and when issued, the Notes will be admitted to the official list of the UK Listing Authority and available to trade on the London Stock Exchange’s regulated market.

Nigeria may equally apply for the Notes to be eligible for trading and listed on the Nigerian FMDQ OTC Securities Exchange and The Nigerian Stock Exchange.

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The pricing was determined following a roadshow led by Kemi Adeosun, the minister of finance; Udoma Udo Udoma, the minister of budget and national planning; Godwin Emefiele, governor of the Central Bank of Nigeria; Patience Oniha, the director-general of the Debt Management Office (DMO); and Ben Akabueze, the director general of the Budget Office.

“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,” Kemi Adeosun said, adding that Nigeria’s economy is beginning to recover since GDP has returned to growth in 2017.

She however warned that Nigeria must maintain the momentum behind its investments in order to further drive growth.

“That is why we are, and will continue to focus investment on the enabling infrastructure we need to broaden economic productivity. Successfully extending our debt profile in the international market to 30 years is a key element of that strategy as it establishes a basis for the longer term financing required for transformational infrastructure investment.

As we have always stated we are progressively replacing debt with revenue, which is reflected in the 2018 Budget proposal. We are establishing the building blocks for inclusive growth and beginning to see the results of the hard decisions that have been made to reset our economy appropriately,” she added.

On her part, Patience Oniha, the DMO director general, said: “With the successful pricing of our 4th Eurobond, Nigeria has become one of the few African issuers whose securities have attracted strong investor interest amongst institutional investors across the globe.

“This time Nigeria issued a new 10-year bond at a yield of 6.500 percent and a 30-year benchmark, priced at a yield of 7.625 percent, which despite the longer tenure remains cheaper than our 15-year issuance earlier this year.

She added that the 30-year is a landmark as the tenor represents the first by a sub-Saharan country other than South Africa and importantly establishes the basis for long-term infrastructure funding, which is a priority for the current government.

“Overall I am pleased that international investors recognize the huge potential in Nigeria. Perhaps even more important is that with this dual tranche issuance the objective of reducing the cost of government borrowing has been achieved,” she noted.