Nigeria’s first Diaspora Bond started trading on Thursday on the Main Market of the London Stock Exchange (LSE).
Nigeria raised $300 million through the Diaspora Bond, the first of its kind from sub-Saharan Africa.
Before now, only two countries had successfully issued Diaspora Bonds –Israel and India –and Nigeria has joined that list.
“We are delighted to welcome Nigeria’s third capital raising this year, on the London Stock Exchange. The innovative structure of the bond allows for the first time, retail investors to participate in the financing of infrastructure projects as part of the development of Nigeria’s economy,” said Ibukun Adebayo, head of Middle East, Africa and South Asia, International Markets Unit, London Stock Exchange.
Diaspora Bonds are issued by a country to its own citizens abroad, to tap into their wealth in the adopted developed countries.
According to the World Bank’s Migration and Remittances Fact Book 2016, diaspora Nigerians sent home $21 billion in remittances in 2015, making Nigeria the sixth largest recipient of remittances in the world.
The bond was pitched to Nigerians living abroad as a chance to contribute to Nigeria’s development, as the country looks to fund significant capital projects.
Through this Bond, the world passed a verdict of optimism on the Nigerian economy and its managers, as interest in the bond was high from retail investors around the world, which was evident in its 130percent subscription.
“The successful listing reinforces the London Stock Exchange’s position as a strong partner for Nigeria and as a leading global venue for raising debt finance”, Adebayo added.
Nigeria has suffered from deficits in the national budget in recent years. Nearly N2.36trillion is expected as deficit in the 2017 budget passed by the National Assembly and signed into law by Acting President Yemi Osinbajo.
Proceeds from the five-year, 5.625% bond will be used to fund infrastructure projects in the country. The bond is the first from an African country that is registered with both the UKLA and the U.S. SEC and targeted at retail investors.
The bond follows the successful raising of $1.5 billion through Nigeria’s Eurobond earlier this year.
The United States and United Kingdom were the top two sources for Nigeria’s diaspora remittance in 2015 –the United totalled $5.7 billion and UK ($3.7billion). According to a recent Pew Research Center report, Nigeria accounts for more foreign-born Africans living in the US than any other African country.
Abraham Nwankwo, director -general, Debt Management Office (DMO) said: “Nigeria records another milestone in international capital markets, as it lists its debut Diaspora Bond on the London Stock Exchange.
“The opening of this source of funding for Nigeria and the listing of the Diaspora Bond on the London Stock Exchange will ensure that the opportunity to invest in Nigeria will be available to a wider range of investors, especially Nigerians in Diaspora who wish to contribute to the development of the country and also earn returns. Further issuances of the Diaspora Bond are planned to finance the development of Nigeria’s infrastructure,” Nwankwo said.
The Diaspora Bond listing on LSE, comes ahead of today’s retirement of Abraham Nwankwo, director general of Debt Management Office (DMO), who has shaped and developed the Nigerian bond market and the debt capital markets.
Nwankwo has completed a ten-year tenure as the director-general of the Debt Management Office and will today June 30, 2017 retire from the service of the agency.
A seasoned professional and astute scholar, Nwankwo has made valuable impact and in no small measure, contributed to the shaping and development of the Nigerian bond market and ultimately, the debt capital markets over the years.
Iheanyi Nwachukwu
