Nigeria raises $4bn Eurobond as foreign investors oversubscribe four times

After an intensive two days of virtual meetings with investors across the globe, Nigeria has raised the sum of $4 billion through Eurobonds, with investors demanding more than four times the amount on offer.

According to the statement issued by the Debt Management Office (DMO), the Order Book peaked at $12.2 billion which enabled the Federal Government of Nigeria (FGN) to raise $1 billion more than the $3 billion it initially announced.

“This exceptional performance has been described as ‘one of the biggest financial trades to come out of Africa in 2021 and an excellent outcome”, said the DMO in a statement.

“The size of the Order Book and the quality of investors demonstrate confidence in Nigeria”, the DMO said.

Nigeria opened its order book for the bond offering on Tuesday, aiming to issue the bond next week, according to a notice to investors.

The country issued the debt in tranches of three tenors.

It raised $1.25 billion for seven years at a yield of 6.125% and sold a 12-year bond at 7.375% to fetch $1.5 billion.

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A 30-year tranche of $1.25 billion was sold at 8.25%.

The government had arranged a two-day call with investors last week and on Monday, with the DMO saying that the bond would be priced following the meetings.

The notice set Sept. 28 for the bond settlement, which will be listed on the London and Nigerian Stock Exchanges.

The Eurobonds are part of a government plan to raise 2.343 trillion naira ($5.71 billion) in external financing to help fund spending in 2021 and to partly finance the 5.6 trillion naira deficit.

The long tenors of the Eurobonds and the spread across different maturities are well aligned with Nigeria’s Debt Management Strategy, 2020 – 2023.

Since the Eurobonds were issued as part of the New External Borrowing in the 2021 Appropriation Act, the raising of $4 billion through Eurobonds provides a significant amount of funds to finance projects in the Act, thus contributing to the implementation of the 2021 Application Act.