FG appoints JP Morgan, Chapel Hill Denham as transaction advisers for eurobond programme

The federal government has appointed eight transaction advisers for a eurobond issuance to finance its 2021 budget deficit.

The Debt Management Office (DMO) announced this in a statement on Wednesday.

In April, DMO said it was working on issuing eurobonds and also announced plans to appoint transaction advisers through an open bid process.

The debt office said 38 institutions had responded to the expression of interest, however, after rigorous evaluation to ascertain the technical capacities of the bidders, only eight institutions were selected.

According to the statement, the federal executive council (FEC) approved the transaction institutions to advise the federal government on the eurobond issuance during its meeting on Wednesday.

The transaction advisers include: JP Morgan, Citigroup, Standard Chartered Bank and Goldman Sachs as international bookrunners/joint lead managers.

Chapel Hill Denham was appointed as the Nigerian bookrunner; FSDH Merchant Bank as the financial adviser; White & Case LLP and Banwo & Ighodalo as the international and Nigerian legal advisers respectively.

“The Transaction Advisers emerged from an Open Competitive Bidding Process as outlined in the Public Procurement Act, 2007 (as amended),” the statement reads.

“With the approval of the Transaction Advisers by FEC, the Debt Management Office (DMO) will now accelerate activities towards the Issuance of the Eurobonds.

“The Eurobonds to be issued, are for the purpose of raising funds for the New External Borrowing of N2.343 trillion (about USD6.2 billion) provided in the 2021 Appropriation Act to part finance the Deficit.

“Whilst the Government expects a successful outing, it will be mindful of costs and risks (in terms of tenor and pricing) in determining the amount of Eurobonds to issue.

“Since the Eurobonds are being issued to part finance the 2021 Budget Deficit, the proceeds will be used to fund various projects in the Budget.

“In addition, the proceeds will result in an inflow of foreign exchange which in turn, will increase Nigeria’s External Reserves and support the Naira Exchange Rate.”

The DMO held its last eurobond sale in 2018 (its sixth sale) where it raised $2.86 billion and issued a record $10.7 billion of international bonds in the same year.

In 2020, it planned to select advisers for a $3.3 billion eurobond issue through an open competitive bid process, however, the sale was deferred due to the negative impact caused by the COVID-19 pandemic.

Last month, Muhammadu Buhari signed the 2021 supplementary appropriation bill of N983 billion into law to primarily fund security and health services.