By Dipo Olowookere
Nigeria has floated its $2.5 billion dual tranche Eurobond under its Global Medium Term Note Programme.
A statement issued by the nation’s Debt Management Office (DMO) on Friday in Abuja disclosed that proceeds of the notes would be used to refinance domestic debt.
According to the debt office, the bonds comprised $1.25 billion 12-year series and $1.25 billion 20-year series.
While the 12-year series has interest rate of 7.14 percent, the 20-year series has an interest rate of 7.69 percent, which will be repaid on maturity.
The notes represent Nigeria’s fifth Eurobond issuance, following issuances in 2011, 2013 and two in
2017.
The DMO said in the statement that the offering had already attracted significant interest from leading global institutional investors with a peak order of over $11.5 billion.
The debt office noted that the offering is expected to close on or about February 23, 2018 subject to the satisfaction of various customary closing conditions.
When issued, the notes will be admitted to the official list of the UK Listing Authority and available to trade on the London Stock Exchange’s regulated market and the Nigerian government may apply for the Notes to be eligible for trading and listed on the Nigerian FMDQ OTC Securities Exchange and the Nigerian Stock Exchange.
Commenting, Minister of Finance, Mrs Kemi Adeosun, disclosed that, “Nigeria is focused on reducing the cost of our debt portfolio and ensuring we have the optimal mix between domestic and international debt.
“The proceeds of the issuance, which would supplement the issuances we completed in 2017, will be used to re-finance domestic debt, which is high cost and short term, with lower-cost international debt, with a longer tenure.
“We will have a range of Eurobonds in issue, encompassing 5 year, 10 year, 12 year, 15 year, 20 year and 30 year bonds, giving investors a full basket of options to participate in.”
Also commenting, the DMO Director General, Ms Patience Oniha, said, “With the successful pricing of our 5th Eurobond, Nigeria’s status as an Issuer of Eurobonds with a strong and diverse investor base has been further consolidated.
“This time, Nigeria has priced a new 12-year bond at a yield of 7.143 percent and a 20-year bond at a yield of 7.696 percent, both of which are consistent in price with our existing portfolio.
“I am particularly pleased that the issuance will enable us to refinance a portion of our existing domestic debt portfolio, with external debt at considerably lower cost, but also that the impact of the process has already led to a reduction in the cost of domestic borrowing, and so a double benefit for the cost of our broader debt portfolio. Lower domestic rates will also benefit corporate borrowers.”
Adedapo Adesanya