The Federal Government is aiming to raise an initial tranche of $500 million through its domestic dollar bond at 9.75 percent yield per annum.
The domestic dollar bond offer, which opened on Monday and will close on August 30, has a five-year tenor with semi annual coupon payment.
Wale Edun, minister of finance, said a total of $2 billion of the bond will be issued in tranches and its proceeds will be channeled into critical sectors of the economy approved by the President.
He said that the coupon of the bond instrument is expected to be benchmarked against comparable FGN Eurobond instruments, such as the FGN ’29 USD paper.
The minimum investable amount is $10,000, with additional increments of $1,000 thereafter.
Analysts anticipate a strong demand, given the attractive yield compared to returns over idle funds in domiciliary accounts.
“It’s going to record a high level of interest from local and international investors, as it is benchmarked against eurobond yields, which should be between 9-10 percent,” Gbolahan Ologunro, portfolio manager, FBNQuest said.
Ologunro said that for local investors, the returns on domiciliary accounts are far lower than what is attainable in the domestic dollar bond.
Nigeria’s credit ratings outlook, which gauges the country’s creditworthiness and is a key consideration of prospective investors, is mixed.
Fitch Ratings, in its latest outlook, revised the country’s credit rating outlook to positive from stable and retained Nigeria’s long-term foreign-currency issuer default rating at B-
Meanwhile, Moody’s, a ratings agency, retained Nigeria’s positive credit outlook and left the nation’s long-term foreign currency unchanged at Caa1.
The bond will be listed on the Nigerian Exchange Limited and FMDQ OTC Securities Exchange Limited.
