Nigeria Prices $500m Bond At 7.5% Yield

The federal government yesterday announced that it has priced its offering of $500 million aggregate principal amount of notes at a yield of 7.5% under its $1.5 billion (increased from US$1 billion) Global Medium Term Note Programme, which will be consolidated and form a single series with the nation existing $1billion 7.875 per cent per annum.
It would be recalled that the Presidency recently got the approval of the National Assembly to raise additional $500 million Eurobond from the international capital market.
The bonds which were issued on 16 February 2017 will mature on 16 February 2032 and repayable by way of bullet repayment of the principal together with the original ones of $1 billion. The proceeds of the Notes would be used to fund capital expenditures in the 2016 budget, according to the ministry of finance.
The successful pricing, which is priced 37.5bps inside the original coupon rate, demonstrates continued strong market appetite for Nigerian securities, director of information in the ministry of finance of finance, Salisu Na’inna Dambatta.
Despite continued volatility in emerging and frontier markets and shows confidence by the international investment community in Nigeria’s economic reform agenda.
When issued, the Notes will be admitted alongside the Original Notes to the official list of the UK Listing Authority and to trading on the London Stock Exchange’s regulated market. Nigeria however have to apply for eligibility of the bond for trading or to be listed on the Nigerian Stock Exchange and Financial Markets Dealers Quotations Over-the-Counter Securities Exchange.
Pricing of the Notes comes shortly after the federal government launched its National Economic Recovery and Growth Plan 2017-2020 on 7 March 2017, which focuses on policy objectives in five core areas: macroeconomic policy, economic diversification and growth drivers, competitiveness, social inclusion and jobs, and governance and other enablers. Key targets of the NERGP include reaching single-digit inflation, further growth in the agricultural sector, reducing unemployment, increasing operational energy capacity and domestic refining capacity, improving transportation infrastructure and stabilising the exchange rate, with an emphasis on implementation, monitoring and evaluation of these economic goals.
Commenting on the successful pricing, the Minister of Finance Mrs Kemi Adeosun said: “The proceeds from this additional note issuance will go towards funding capital projects in the 2016 budget. Infrastructure spending is at the heart of our National Economic Recovery and Growth Plan, which was released earlier this month and guides how we will deliver the urgent reform our economy needs between now and 2020. Resetting the Nigerian economy is essential in order for us to deliver sustainable long term growth.”
Director General, Debt Management Office Dr Abraham Nwankwo said, “Nigeria is delighted to have increased our 2017 Eurobond programme to US$1.5 billion and to have secured the additional US$500 million. Nigeria was keen to take advantage of favorable market conditions and investor appetite for Nigerian debt to complete our foreign borrowing programme for the 2016 budget and deliver further funds for vital capital projects.”
Citi, and Standard Chartered acted as Joint Lead Managers and Stanbic IBTC, as Financial Advisers on the issuance of the bond.

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