The Nigerian government has commenced the process to again issue a Eurobond in the International Capital Market (ICM).
The Debt Management Office (DMO), which announced the commencement of the process on Thursday in Abuja part of the plans include virtual meetings with investors scheduled for September 17 and September 20, 2021. The last time Nigeria accessed the ICM for a Eurobond issue was in November 2018.
The DMO said the meetings are to avail local investors to explore investment opportunities in the Eurobonds issue.
The debt management agency said this would be the first time local investors would be included in the Roadshows, which is one of the reasons a Nigerian Bookrunner (Chapel Hill Denham Advisory Services Ltd) was appointed as one of the Transaction Advisers.
The other 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); Financial Adviser (FSDH Merchant Bank Limited); International Legal Adviser (White & Case LLP), and Nigerian Legal Adviser (Banwo & Ighodalo).
Through the Eurobond issuance, the DMO said Nigeria is expected to raise up to $3 billion, but no more than $6.2 billion.
All statutory approvals from both the Executive Council of the Federation (ExCoF) and the National Assembly have been received, to support the government’s effort to implement the New External Borrowing plan in the 2021 Appropriation Act.
Proceeds from the Eurobond issue are for the financing of various projects in the Act.
In addition to providing funding to part-finance the deficit in the 2021 Appropriation Act, the DMO said the issuance of Eurobonds by Nigeria would benefit the country in many other strategic ways, including guarantying 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 the private sector and sub-national borrowers. In effect, it helps the sovereign debt 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 would be strengthened to provide banking services, whilst also meeting regulatory requirements.
Nigeria has a sovereign yield curve in the ICM, extending up to 30 years.
Also, the local listing of Nigeria’s Eurobonds on the Nigerian Exchange Limited and the FMDQ Securities Exchange Limited, has increased the range of products on these two exchanges and their respective market capitalization.
Overall, the DMO said the Eurobond issuances by Nigeria and the investor meetings that would precede the pricing, would provide a strong global platform for Nigeria to tell its own story and opportunities available in Nigeria for investors.