Nigeria borrows fresh $4bn through Eurobonds
Nigeria has taken out another $4 billion in Eurobonds.
According to information gathered from DMO’s external debt stock figure, Nigeria’s Eurobond debt has increased from $10.37 billion at the end of March to $14.37 billion.
The money was raised after a two-day marathon of virtual meetings with investors all across the world.
On Tuesday evening, September 21, the Debt Management Office (DMO) announced this in a statement on its website.
“Nigeria has raised $4 billion through Eurobonds after an intensive two days of virtual meetings with investors across the world,” the DMO said in a statement.
“The order book peaked at $12.2 billion, allowing the Nigerian government to raise $1 billion more than its declared $3 billion.”
“This outstanding success has been dubbed “one of the largest financial trades to emerge from Africa in 2021” as well as a “great outcome.” Investors from Europe, North America, and Asia submitted bids for the Eurobonds.
“Local investors were also active participants. The size of the order book and the caliber of the investors confirmed Nigeria’s trustworthiness.”
The Eurobonds were sold in three tranches: seven years–$1.25 billion at 6.125 percent per year; twelve years–$1.5 billion at 7.375 percent per year; and thirty years–$1.25 billion at 8.25 percent per year.
The Eurobonds’ extended tenors and spread over several maturities are well matched with Nigeria’s Debt Management Strategy, which runs from 2020 to 2023, according to the DMO.
It was emphasized that, because the Eurobonds were issued as part of the New External Borrowing in the 2021 Appropriation Act, the $4 billion raised through Eurobonds provides a considerable amount of funds to finance projects in the Act, so contributing to the Act’s implementation.
The DMO indicated that, in addition to providing cash to partially cover the deficit in the 2021 Appropriation Act, the issue of Eurobonds would help the country in a variety of strategic ways.
According to the DMO, it would also result in a foreign exchange influx, resulting in an increase in external reserves, which would help support the naira exchange rate and Nigeria’s sovereign rating.
It went on to say that by raising cash from outside sources such as Eurobonds, Nigeria freed up room in the local market for private sector and sub-national borrowers.
According to the debt management organization, “In effect, it protects the sovereign from being pushed out of the domestic market by other borrowers. Nigeria’s Eurobond issuance has paved the way for the business sector, notably banks, to issue Eurobonds to raise money in the ICM.”