Nigeria meets investors over $3bn Eurobond issuance
Nigerian authorities began virtual meetings with potential investors for the proposed $3bn Eurobond issuance today, according to the Debt Management Office (DMO).
Through the issuance, Nigeria, currently rated B2 (Negative) by Moody’s, B- (Stable) by S&P and, B (Stable) by Fitch, hopes to raise up to USD$3 billion but not more than USD$6.2 billion.
“This means that after meeting with investors on September 17 and 20, we could issue on 21 if market conditions are good,” a top official told BusinessDay.
The last time Nigeria accessed the International Capital Market (ICM) was in November 2018, but had been keenly planning a return to the market as revenues shrink amid bloated budget deficits.
In order to avail local investors the opportunity to invest in the Eurobonds, meetings will also be held with local investors.
This is the first time local investors will be included in the Roadshows, and for this reason, a Nigerian Bookrunner (Chapel Hill Denham Advisory Services Ltd) was appointed as one of the Transaction Advisers.
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Other advisers include: JP Morgan, Citigroup Global Markets Limited as International Bookrunners; Standard Chartered Bank and Goldman Sachs are the Joint Lead Managers; . FSDH Merchant Bank Ltd was selected as the Financial Adviser; White & Case LLP as International Legal Adviser ; and Banwo & Ighodalo, as Nigerian Legal Adviser.
Since the ICM debut in 2011, Nigerian investors have always participated in the biding process, including banks, insurance companies and PFAs.
“But the advantage now of having a Nigerian book runner is to allow us to be able to talk to our own local investors here since they continue to show interest. For free marketing, they will also be making inquiries just like the foreign investors,” Oniha had told BusinessDay in a chat.
The fresh 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, the DMO said.
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.
Other benefits include amongst others: to enable an inflow of foreign exchange, leading to an increase in External Reserves, which then help support the Naira Exchange Rate, and Nigeria’s sovereign rating.
Also 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.
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. Meanwhile, Nigeria has a sovereign yield curve in the ICM, extending up to 30 years.
Also, 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.