Nigeria Targets USD$3bn From Eurobond Issuance To Part-finance Budget Deficit

The Federal Government of Nigeria plans to raise up to USD$3 billion from a Eurobond issuance at the International Capital Market (ICM) to part-finance 2021 Budget deficit.

Debt Management Office in a statement said, the last time Nigeria accessed the ICM was November 2018, disclosing virtual meetings with investors have been scheduled for September 17 and September 20, 2021.

TheFact Nigeria gathered from DMO that in order to avail local investors the opportunity to invest in the Eurobonds, meetings would also be held with local investors.

It said, “this is the first time local investors will be included in the Roadshows, and this is one of the reasons why a Nigerian Bookrunner (Chapel Hill Denham Advisory Services Ltd) was appointed as one of the Transaction Advisers.

“Through the Eurobond issuance, Nigeria is expected to raise up to USD$3 billion but no more than USD$6.2 billion. The issuance for which all statutory approvals have been received, is for the purpose of implementing the New External Borrowing in the 2021 Appropriation Act. Proceeds are for the financing of various projects in the Act.

“In addition to providing funding to part-finance the deficit in the 2021 Appropriation Act, the issuance of Eurobonds by Nigeria benefits the country in many other strategic ways; amongst which are:

1. It is an inflow of foreign exchange, leading to an increase in External Reserves. External Reserves help support the Naira Exchange Rate, and Nigeria’s sovereign rating.

2. When Nigeria raises funds externally, through Eurobonds, it frees up space in the domestic market for private sector and sub-national borrowers. In effect, it helps the sovereign not to crowd out other borrowers in the domestic market.

3. The issuance of Eurobonds by Nigeria has opened up opportunities for Nigeria’s corporate sector notably banks, to issue Eurobonds to raise capital in the ICM. By so doing, their capital base has been strengthened to provide banking services whilst also meeting regulatory requirements. Nigeria has a sovereign yield curve in the ICM, extending up to 30 years.

4. The local listing of Nigeria’s Eurobonds on the Nigerian Exchange Ltd. and the FMDQ Securities Exchange Ltd., have increased the range of products on these two (2) exchanges and their respective market capitalization.

Overall, Eurobond issuances by Nigeria and the investor meetings that precede the pricing, have provided a strong global platform for Nigeria to tell its own story and opportunities available in Nigeria for investors.

“The Transaction Advisers appointed by Nigeria for the issuance are:
a) International Bookrunners/ – JP Morgan, Citigroup Global Markets Limited,

b) Joint Lead Managers Standard Chartered Bank and Goldman Sachs.

c) Nigerian Bookrunner – Chapel Hill Denham Advisory Services Ltd
d) Financial Adviser – FSDH Merchant Bank Ltd
e) International Legal Adviser – White & Case LLP

f) Nigerian Legal Adviser – Banwo & Ighodalo

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