Nigerian Government Floats US$3bn Dual-Tranche Eurobond

The Nigerian Government, through the Debt Management Office (DMO), has floated a fresh $3 billion Eurobond.

The government priced the dual tranche Eurobond (US$1.5 billion 10-year and US$1.5 billion 30-year) under its US$4.5 billion Global Medium Term Note programme.

The DMO announced on November 20, 2017, that “the 10-year series will bear interest at a rate of 6.500%, while the 30-year series will bear interest at a rate of 7.625%, and, in each case, will be repayable with a bullet repayment of the principal on maturity”.

Information on the DMO website equally states that the offering, which has attracted significant interest from leading global investors, “will be admitted to the official list of the UK Listing Authority and available to trade on the London Stock Exchange’s regulated market”.

The Minister of Finance, Mrs Kemi Adeosun, said in a statement by her media aide, Oluyinka Akintunde, that the Notes represent Nigeria’s 4th Eurobond issuance, following issuances in 2011, 2013 (two series) and earlier in 2017.

“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,” said Adeosun.

“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,” the minister said.

Ms. Patience Oniha, the DMO Director-General, said of the Notes’ pricing: “With the successful pricing of our 4th 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% and a 30-year benchmark, priced at a yield of 7.625%, 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.”

“Perhaps even more important is that with this dual tranche issuance the objective of reducing the cost of government borrowing has been achieved,” said the DMO DG.