Nigeria’s FX Market Expects Boost From $900m Domestic Bond Raise

By Adedapo Adesanya

The Nigerian foreign exchange market is expected to have some much-needed boost following the first-ever foreign-currency domestic bond which secured $900 million in subscriptions.

The proceeds from the bond will be allocated to critical economic sectors, as approved by President Bola Tinubu, the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun said.

While discussing the results of the historic bond issuance on Tuesday, Mr Edun noted that the oversubscription reflects investor confidence in Nigeria’s economic stability and potential for growth.

“The issuance of this inaugural domestic FGN US Dollar Bond highlights the continued faith investors have in Nigeria’s economy,” Mr Edun said.

The bond attracted a wide range of investors, including Nigerians both locally and abroad, as well as institutional investors.

Also, expected to receive a boost is Nigeria’s FX market, which has been gripped by a shortage of forex and a high seasonal demand amid a slowdown in investments and a decline in oil sales, which accounts for over 60 per cent of the country’s foreign earnings.

The local currency has been battered heavily this month, with the exchange rate closing at N1,639 per Dollar on Tuesday at the official market and around N1,650 at the black market.

The $500 million domestic FGN US Dollar Bond, with a five-year maturity and a 9.75 per cent coupon, is the first tranche of a $2 billion bond programme registered with the Securities and Exchange Commission (SEC).

The structure of the bond allows the government to absorb oversubscriptions up to the full $2 billion programme limit.

Also speaking, the Director-General of the Debt Management Office, Ms Patience Oniha, described the bond’s success as a pivotal moment for Nigeria’s economic development.

She noted that the $900 million raised from diverse investors underscores the growing sophistication of Nigeria’s domestic fixed-income market.