Nigeria’s 3rd Eurobond issue over-subscribed despite economic crisis

Minister of Finance, Kemi Adeosun
Minister of Finance, Kemi Adeosun

In spite of the gloom on the country’s economy, investor confidence in Nigeria remains high as the $1 billion Eurobond issued by the federal government on Thursday was over-subscribed by almost eight times.

The over-subscription was with orders in excess of $7.8 billion compared to a pre-issuance target of $1 billion.

The bond, issued under Nigeria’s newly established Global Medium Term Note programme, is the third in the series after the ones in 2011 and 2013.

The note has February 16, 2032 as maturity date for repayment on the principal, and is expected to yield interest at a rate of 7.88 percent.

The Federal Ministry of Finance said proceeds from the bond would be used to fund capital expenditures in the 2017 budget.

The government said the offering attracted significant interest from leading global institutional investors.

The notes would be admitted to the official list of the UK Listing Authority and available to trade on the London Stock Exchange’s regulated market.

“Nigeria will apply for the Notes to be eligible for trading and listed on the Nigerian FMDQ OTC Securities Exchange and the Nigerian Stock Exchange,” finance ministry said in statement.

The pricing for the bond was determined during a roadshow to promote the issuence of the bond.

The roadshow was led by the minister of Finance, Kemi Adeosun; accompanied by her counterpart in the Ministry of Budget and National Planning, Udo Udoma; Central Bank of Nigeria governor, Godwin Emefiele; and Director-General of the Debt Management Office (DMO), Abraham Nwankwo, as well as the Director General of the Budget Office, Ben Akabueze.

“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, ” Mrs. Adeosun said of the bond.

“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.”

Commenting on the Notes’ pricing, the DMO Director General, Abraham Nwankwo, 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.

He said the Eurobond is the latest step in a broader debt strategy designed to significantly re-balance our debt profile towards longer term financing and reduce the burden of interest on our annual budget.


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