Investor Confidence Rises As Nigeria’s Eurobond Offer Oversubscribed at $9.1bn, Secures $2.2bn

Nigeria’s latest Eurobond offer has been oversubscribed at $9.1 billion, marking Nigeria’s successful return to the international bond market after a two year hiatus, in sign of a possible investors’ confidence in the West African country’s economy.

This is coming after a long wait, as the country issued a dual-tranche Eurobond offering under its Global Medium Term Note Programme to finance the country’s 2024 fiscal deficit today.

However, the issuance which closed on Monday, although it was oversubscribed in excess of $9 billion, but the federal government eventually took just $2.2 billion across both bonds.

The federal government sold $700 million worth of the 6.5 year Eurobond maturing in 2031 at a coupon rate of 9.625 per cent and $1.5 billion of the 10-year tenure at 10.375 per cent.

It marked a pivotal moment in the country’s ongoing efforts to address its growing fiscal deficit, with the funds raised meant to primarily support Nigeria’s 2024 budget, which has come under pressure due to persistent revenue shortfalls and rising public spending.

However, the bonds were issued under the Regulation S/144A structure, making them available to both US and international investors.

The oversubscription reflected continued investor interest in Nigerian debt, even though the yields have raised concerns about the country’s financial stability.

In a statement on Monday, the Debt Management Office (DMO) announced the successful issuance of the Eurobonds, explaining that the bonds attracted a wide range of investors from multiple jurisdictions, including the United Kingdom, North America, Europe, Asia, Middle East and participation from Nigerian investors.

“The Federal Republic of Nigeria successfully priced $2.2 billion in Eurobonds maturing in 2031 (6.5-year) and 2034 (10- year) in the international capital markets on 2 December 2024, with $700 million and $1.5 billion placed in the 2031 and 2034 maturities, respectively.

“The notes were priced at a Coupon and Re-offer Yield of 9.625 per cent and 10.375 per cent, respectively. Nigeria is pleased to have attracted a wide range of investors from multiple jurisdictions including the United Kingdom, North America, Europe, Asia, Middle East and participation from Nigerian investors.

“This it views as an expression of continued investor confidence in the country’s sound macro-economic policy framework and prudent fiscal and monetary management.

“The transaction attracted a peak orderbook of more than $9.0 billion. This underscores the strong support for the transaction across geography and investor class.

“With respect to investor class, demand came from a combination of Fund Managers, Insurance and Pension Funds, Hedge Funds, Banks and other Financial Institutions,” it stated.

DMO’s Director General, Patience Oniha, celebrated the landmark achievement, citing strong investor demand and reaffirming DMO’s commitment to transparency and continued engagement with investors.

DMO said the notes would be admitted to the official list of the UK Listing Authority and available to trade on the London Stock Exchange’s regulated market, the FMDQ Securities Exchange Limited, and the Nigerian Exchange Limited.

“The proceeds from this Eurobond issuance will be used to finance the 2024 fiscal deficit and support the government’s budgetary needs,” DMO said.

Also, Finance Minister, Mr. Olawale Edun, in a reaction, emphasised the confidence in President Bola Tinubu’s administration’s efforts to stabilise the Nigerian economy and promote sustainable growth.

He noted the strong investor interest in the Eurobonds as a sign of increasing confidence in Nigeria’s economic direction.

“The broad range of investor appetite to invest in our Eurobonds is encouraging as we continue to diversify our funding sources and deepen our engagement with the international capital markets,” he said.

Also, the Central Bank of Nigeria’s Governor, Olayemi Cardoso, highlighted the positive outcome as a reflection of investor confidence and Nigeria’s improved liquidity and market access.

Nigeria is returning to the international capital markets for the first time in over two years with the significant offering.

The Eurobond sale is managed by a consortium of international and domestic financial institutions, including Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., and Standard Chartered Plc, with Chapel Hill Denham Advisory Limited acting as the Nigerian bookrunner.

In November, Edun said approximately $1.7 billion was expected from the Eurobond offer and $500 million from a sukuk financing to strengthen the country’s finances and support economic reforms.

Emmanuel Addeh

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