From Uche Usim, Abuja
The Federal Government, through the Debt Management Office (DMO) is set to issue a fresh Eurobond at the International Capital Market (ICM). The DMO in a statement yesterday said that the last time the country accessed the ICM was in November 2018, adding that virtual meetings with investors have been scheduled for September 17 and September 20, 2021.
The Office explained that meetings will also be held with local investors in order to avail them the opportunity to invest in the Eurobonds.
“This is the first time local investors will be included in the roadshows, and this is one of the reasons a Nigerian Bookrunner (Chapel Hill Denham Advisory Services Ltd) was appointed as one of the Transaction Advisers.
“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”, the DMO explained.
It’s added that Eurobond, aside providing funding to part-finance the deficit in the 2021 Appropriation Act, also benefits the country in many other strategic ways; including acting as 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 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 exchanges and their respective market capitalisation.
“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 DMO stated further.
Transaction Advisers appointed by Nigeria for the issuance include International Bookrunners/ – JP Morgan, Citigroup Global Markets Limited; Joint Lead Managers Standard Chartered Bank and Goldman Sachs; Nigerian Bookrunner – Chapel Hill Denham Advisory Services Ltd. Financial Advisers are; FSDH Merchant Bank, International Legal Adviser – White & Case LLP And Nigerian Legal Adviser – Banwo & Ighodalo.