By Modupe Gbadeyanka
Nigeria’s first foreign currency denominated bonds was admitted by the Nigerian Stock Exchange (NSE) on Thursday, March 2, 2017.
This brings to five the number of listing that has occurred on the NSE this year. Earlier, the NSE admitted Forte Oil’s Bond, Exchange Traded Fund (ETF) and Real Estate Investment Trust (REITs) whilst welcoming Medview Airline and Jaiz Bank to its Main Board via Listing by Introduction.
Today’s listing of the Federal Government’s $1 billion Eurobond was issued under Nigeria’s newly established Global Medium Term Note programme.
According to the Director General of the Debt Management Office (DMO), Dr Abraham Nwankwo, the listing of “domestic Sovereign Eurobond reinforces FGN’s commitment to deepen and grow the Nigerian capital market.”
“Developing the domestic market can help bridge the infrastructure deficit constraining economic growth,” he said further.
The 15-year domestic Sovereign Eurobond was priced at par and at a coupon of 7.875% per annum.
According to Mr Nwankwo, the Eurobond, which was over-subscribed by 780 percent, is part of government’s funding strategy for its 2016 capital expenditure and will be spent on key infrastructure projects, in line with its economic plan.
“This huge oversubscription rate underscores a buoyant investor’s appetite for building exposure to Nigeria and demonstrates international confidence in the economy’s long term prospects,” the DMO boss said.
Commenting also on the development, the Executive Director, Market Operations and Technology, Mr Ade Bajomo, commended the DMO for listing the Eurobond in the nation’s bourse, saying it will diversify its investors’ base by giving Nigerian institutional investors access to the bond.
According to him, it will boost price discovery and liquidity in the local market as well as help attract reliable long term foreign currency denominated funds into the financial market.
He also said it will set the foundation for raising and listing more foreign denominated securities in Nigeria which will open up additional capital raising options for issuers and portfolio diversification opportunities to investors.
Mr Bajomo pointed out that, “To ensure seamless trading and settlement of the Eurobond, the NSE, working with Central Securities Clearing System (CSCS), developed and presented to issuers and transaction parties, a framework depicting onshore and cross border trade and settlement process in line with robust market practices.”
Adedapo Adesanya