Good News for Investors as Nigeria Issues First Eurobond in Over 2 Years
- Nigeria is selling Eurobonds for the first time in more than two years in an attempt to reduce its fiscal imbalance
- African countries that have returned to the international capital market include Ivory Coast, South Africa, and others
- To raise $900 million for this year's budget, Nigeria recently sold its first domestic issuance of bonds denominated in US dollars
Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
In an effort to lower its fiscal deficit, Nigeria is selling eurobonds for the first time in over two years.
Source: UGC
The nation is releasing a benchmark-size issue of 10-year notes in addition to $500 million worth of 6.5-year bonds. For the shorter-dated securities, yields are shown in the 10.125% range, and for the longer-dated securities, in the 10.625% range.
“It is very likely that they will be well subscribed given the limited supply of sovereign issues in Sub-Saharan Africa and due to Nigeria’s ongoing reforms,” said Samantha Singh-Jami, an Africa strategist at Rand Merchant Bank.
After they were priced out following a dramatic increase in global interest rates in 2022 in reaction to rising inflation, Ivory Coast, South Africa, Benin, Senegal, Kenya, and Cameroon are among the African countries that have returned to international capital markets this year.
March 2022 marked Nigeria's most recent Eurobond sale. In September, the biggest oil producer in Africa conducted its first domestic sale of dollar-denominated bonds to earn $900 million for this year's budget.
Public finances have been burdened by disruptions in crude oil production, low tax collection, and a lack of economic diversification, which have made it difficult for the government to balance public spending with revenue.
In order to fund a budget deficit, the administration announced intentions to raise $2.2 billion from overseas investors last month.
Bloomberg reported that Nigeria is rated Caa1 by Moody’s Ratings, and B- by both S&P Global Ratings and Fitch Ratings.
Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., and Standard Chartered Plc. are among the lenders managing the sale.
FG invites Nigerians to invest in savings bonds
Legit.ng reported that two Nigerian federal government savings bonds are now available for subscription at a rate of N1,000 each, according to the Debt Management Office (DMO).
The initial offer is a two-year FGN savings bond with an annual interest rate of 17.440% that matures on November 13, 2026, according to a statement from the Debt Management Office (DMO).
A three-year FGN savings bond with an annual interest rate of 18.440% is the second offer. It is due on November 13, 2027.
Proofreading by Nkem Ikeke, journalist and copy editor at Legit.ng.
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Source: Legit.ng
