Nigeria Floats US$3bn Dual-tranche Eurobond

Ndubuisi Francis in Abuja
Nigeria has announced the floating of a $3 billion Eurobond, offering an aggregate principal amount of dual series notes under its US$4.5 billion Global Medium Term Note programme (increased from US$1.5 billion).

On March 30 this year, the country announced that its $500 million notes had been consolidated with the existing $1 billion notes, under the $1.5 billion Global Medium Term Note programme to form a single series with the existing $1 billion notes.

The $1 billion bond had been issued in February and due to mature by 2032.
The latest $3 billion Notes comprise a US$1.5 billion 10-year series and a US$1.5 billion 30-year series, bringing the total under the Global Medium Term Note Programme to US$4.5 billion.

A statement issued by Mr. Oluyinka Akintunde, media aide to the Minister of Finance, Mrs. Kemi Adeosun, said the 10-year series would bear interest at a rate of 6.5 per cent, while the 30-year series will bear interest at a rate of 7.625 per cent, which will be repayable with a bullet repayment of the principal on maturity.

The offering, which attracted significant interests from leading global institutional investors, is expected to be closed on or about November 28, 2017, subject to the satisfaction of various customary closing conditions.

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

The pricing was determined following a roadshow led by Adeosun; the Minister of Budget and National Planning, Senator Udoma Udo Udoma; Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele; Director-General of the Debt Management Office (DMO), Ms. Patience Oniha, and the Director-General of the Budget Office of the Adeosun disclosed that the federal government would utilise the proceeds of the Notes in funding the approved budgetary expenditures and for refinancing of domestic debt, as may be applicable.

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

Adeosun said: “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.

“Our economy is beginning to recover, Gross Domestic Product (GDP) having returned to growth in 2017, but we must maintain the momentum behind our 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 out 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.”

Commenting on the Notes’ pricing, the Director-General, DMO , Ms. Patience Oniha, said: “With the successful pricing of our fourth 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 per cent and a 30-year benchmark, priced at a yield of 7.625 per cent, which despite the longer tenure remains cheaper than our 15-year issuance earlier this year.

“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 this government.”
Oniha expressed satisfaction with international investors’ recognition of Nigeria’s huge potential.
“Perhaps even more important is that with this dual tranche issuance the objective of reducing the cost of government borrowing has been achieved,” she added.