FG raises $2.2bn after issuing first eurobond in two years

The Debt Management Office (DMO) says Nigeria has raised $2.2 billion in the international capital market through its latest eurobond auction.

The development comes two years after the federal government issued its last eurobond.

In November, Wale Edun, minister of finance and coordinating minister of the economy, said approximately $1.7 billion is expected from a eurobond offer and $500 million from a sukuk financing to strengthen the country’s finances and support economic reforms.

The sum is expected to be used to finance the N9.1 trillion deficit in the 2024 budget

In a statement on Monday, DMO said it auctioned two bonds including a 6.5 year eurobond which is expected to mature in 2031 and a 10-year eurobond in 2034, respectively, in the international capital markets on December 2.

According to the statement, although Nigeria priced the eurobond at $2.2 billion, the bonds recorded a peak orderbook of more than $9 billion.

“The Federal Republic of Nigeria (the “Republic”) successfully priced US$2.2 billion in Eurobonds (the “Notes”) maturing in 2031 (6.5-year) and 2034 (10- year) in the international capital markets on 2 December 2024, with US$700 million and US$1.5 billion placed in the 2031 and 2034 maturities, respectively,” the statement reads.

“The 6.5-year and the 10- year. The Notes were priced at a Coupon and Re-offer Yield of 9.625 per cent and 10.375 per cent, respectively.

“Nigeria is pleased to have attracted a wide range of investors from multiple jurisdictions including the United Kingdom, North America, Europe, Asia, Middle East and participation from Nigerian investors, which it views as an expression of continued investor confidence in the country’s sound macro-economic policy framework and prudent fiscal and monetary management.”

DMO said the transaction attracted “a peak orderbook of more than $9 billion,” underscoring the strong support for the transaction across geography and investor class.

Regarding investor class, the agency said demand came from a combination of fund managers, insurance and pension funds, hedge funds, banks and other financial institutions.

DMO said 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, the FMDQ Securities Exchange Limited, and the Nigerian Exchange Limited.

“The proceeds from this Eurobond issuance will be used to finance the 2024 fiscal deficit and support the government’s budgetary needs,” DMO said.

“Nigeria mandated Chapel Hill Denham, Citigroup, Goldman Sachs, J.P. Morgan and Standard Chartered Bank as Joint Bookrunners. FSDH Merchant Bank Limited acted as Financial Adviser on the issuance.”

EDUN: SUCCESSFUL ISSUANCE OF EUROBOND SIGNIFIES STABILISATION OF ECONOMY 

Following the successful pricing, Edun said the successful issuance signals increasing confidence in the ongoing efforts of the President Bola Tinubu administration “to stabilize the Nigerian economy and position it on the path of sustainable and inclusive growth for the benefit of all Nigerians”.

“The broad range of investor appetite to invest in our Eurobonds is encouraging as we continue to diversify our funding sources and deepen our engagement with the international capital markets,” he said.

On his part, Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), said the outcome underscores the growing confidence of investors and the resilience of the Nigeria credit.

According to the minister, the result also marks “our improved liquidity position and continued access to international markets to support the financing needs of the government”.

Commenting on the notes’ pricing, Patience Oniha, director-general (DG) of the Debt Management Office (DMO), said with the successful pricing of the notes on intra-day basis, Nigeria has registered a landmark achievement in the international capital market.

“The size of the Orderbook at approximately 4.18x of the offer amount, and the strong and diverse investor base helped to price the new 6.5- yr at 9.625%, while new 10-year Notes was priced at 10.375%,” she said.

The DMO said it remains committed to maintaining transparency and open communication with “investors and stakeholders and appreciates the continued confidence and support of the international and Nigerian investors who participated in the pricing”.