Nigeria’s Eurobond comeback nets $2.2bn in landmark offering
Onome Amuge
Nigeria has raised $2.2 billion through its latest Eurobond sale, marking its return to the international capital markets after a gap of eight months (since March 2022). The auction saw the sale of two bonds, each with a different maturity period.
While the Eurobond auction attracted e $9 billion in bids, Nigeria’s finance ministry allocated $2.2 billion to investors, with the funds primarily earmarked for the implementation of the 2024 budget.
The two bonds issued in the Eurobond auction received overwhelming investor interest, leading to oversubscription of $700 million for the 6.5-year bond priced at 9.62 percent and $1.5 billion for the 10-year bond priced at 10.375 percent.
The dual Regulation S/144A structure of the bonds made them accessible to U.S. and international investors alike, highlighting the global appeal of Nigeria’s debt instruments.
While the strong investor demand is a positive sign, concerns have been raised about Nigeria’s financial stability due to the relatively high yields offered by the bonds.
The Debt Management Office (DMO) confirmed the successful issuance of the Eurobonds in an official statement, stating that the bonds attracted a diverse investor base from across multiple jurisdictions including the United Kingdom, North America, Europe, Asia, and the Middle East, in addition to Nigerian investors.
The DMO stated, “The Federal Republic of Nigeria (the “Republic”) successfully priced US$2.2 billion in Eurobonds (the “Notes”) maturing in 2031 (6.5-year) and 2034 (10- year) in the international capital markets on 2 December 2024, with US$700 million and US$1.5 billion placed in the 2031 and 2034 maturities, respectively. The 6.5-year and the 10- year. The Notes were priced at a Coupon and Re-offer Yield of 9.625 per cent and 10.375 per cent, respectively.
“Nigeria is pleased to have attracted a wide range of investors from multiple jurisdictions including the United Kingdom, North America, Europe, Asia, Middle East and participation from Nigerian investors, which it views as an expression of continued investor confidence in the country’s sound macro-economic policy framework and prudent fiscal and monetary management.
“The transaction attracted a peak orderbook of more than US$9.0 billion. This underscores the strong support for the transaction across geography and investor class. With respect to investor class, demand came from a combination of Fund Managers, Insurance and Pension Funds, Hedge Funds, Banks and other Financial Institutions.”
In the DMO statement, Finance Minister Olawale Edun stressed the market’s confidence in President Bola Tinubu’s administration and its efforts to stabilise the Nigerian economy and promote long-term growth.
Commenting on the strong demand for the Eurobonds, Edun described it as a testament to the increasing faith in Nigeria’s economic direction, adding that the successful issuance was a reflection of investors’ belief in the government’s commitment to economic stability and progress.
Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), commended the favourable outcome of the Eurobond sale, describing it as a reflection of the increased investor confidence in Nigeria’s economy and a testament to the country’s improved liquidity and market access.
Patience Oniha, director-general of DMO, also lauded the landmark achievement, emphasising the strong investor demand (4.18 times the offer size) and the competitive pricing of the 6.5-year and 10-year Notes at 9.625 percent and 10.375 percent respectively.
Oniha attributed the success of the Eurobond sale to the transparent processes and ongoing engagement with investors by the DMO.
She further committed to maintaining these standards as Nigeria continues to strengthen its financial position and improve market access for future debt issuances.