Domestic Investors Can Purchase Nigeria’s $3bn Eurobond—DMO

By Aduragbemi Omiyale

The Debt Management Office (DMO) has said domestic investors would be allowed to purchase the $3 billion Eurobond to be issued next month by the Nigerian government.

In the past, the debt office had only allowed foreign investors to participate in Eurobond sales but this time, the agency is also targeting local investors in the exercise.

In a statement issued on Thursday, the DMO said it would hold meetings with interested moneybags today and next Monday to inform them of the benefits of subscribing to the notes.

A few weeks ago, the debt office announced parties to the proposed transaction and yesterday, it said Chapel Hill Denham Advisory Services Limited was chosen amount the eight firms to handle the sale of the papers to domestic investors, while JP Morgan and Citigroup Global Markets Limited would handle the offshore investors.

The DMO said though it intends to raise $3 billion from the exercise, it may also sell up to $6.2 billion, which was approved by the nation’s parliament.

The last time the country approached the global debt capital market was in 2018. It wanted to explore the space last year but the COVID-19 pandemic frustrated such plans, which forced the agency to convert the Eurobond sale to domestic.

“Through the Eurobond issuance, Nigeria is expected to raise up to $3 billion but no more than $6.2 billion. The 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,” a part of the statement said.

The DMO further 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; amongst which are:

“It is an inflow of foreign exchange, leading to an increase in external reserves. External Reserves help support the Naira exchange rate and Nigeria’s sovereign rating.

“When Nigeria raises funds externally, through Eurobonds, it frees up space in the domestic market for the 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. Nigeria has a sovereign yield curve in the ICM, extending up to 30 years.

“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,” the notice added.