FGN issued Eurobond to the tune of $500 million

  • FG borrows $500 million more from US;
  • Earlier loaned $1.0 billion in February 2017;
  • Debt matures in 2032 with total principal sum and Original Notes;

The Federal Government of Nigeria has increased its foreign debts with a second tranche of issued Eurobond to the tune of $500 million at a prospective yield of 7.5 per cent, indicating a 37.5 bases points against 7.875 per cent paid for the original instrument of $1.0 billion issued first in February 2017.

The move is pursuant to the government’s effort to strengthen the economy saving significant amount on annual coupon repayment obligations.

FGN issued Eurobond to the tune of $500 million
Nigerian President Muhammadu Buhari

The country sealed a second foreign borrowing after it clinched a deal from Citibank, USA and Standard Chartered Bank, and the United Kingdom acting as Joint Lead Managers with Stanbic IBTC Nigeria Plc as Financial Advisers, sums up the latest total foreign borrowing of Eurobond at $1.5 billion which the government is using as a measure to fund its 2016 budget set to expire next month.

Last night the Finance Ministry noted that the terms and conditions attached to the latest borrowed Eurobond Notes will be same as those of the Original Notes, paying a coupon of 7.875% annually with set maturity pegged on February 16, 2032 culminating at the total repayment of the principal sum cum the Original Notes.

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“The successful pricing, which is 37.5bps inside the original coupon rate, demonstrates continued strong market appetite for Nigerian securities. This, despite continued volatility in emerging and frontier markets, shows confidence by the international investment community in Nigeria’s economic reform agenda,” the statement signed by the director of information in the ministry, Salisu Na’Inna Dambatta, added.

The statement reads further: “When issued, the new Notes will be admitted alongside the original Notes to the official list of the UK Listing Authority and to trading on the London Stock Exchange’s regulated market. The Republic may apply for the Notes to be eligible for trading or listed on the Nigerian Stock Exchange and Financial Markets Dealers Quotations Over-the-Counter Securities Exchange.”

The country’s recent Pricing of Notes surfaced shortly after the launching of a National Economic Recovery and Growth Plan (NERGP) 2017-2020 on March 7, 2017. The launched plan aims on policy objectives in major economic areas of – macroeconomic policy, economic diversification and growth drivers, competitiveness, social inclusion and jobs, and governance plus other possibilities.

FGN issued Eurobond to the tune of $500 million

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The NERGP growth plan major targets including achieving single-digit inflation, further growth in the agricultural sector, reducing unemployment, increasing operation energy capacity and domestic refining capacity, improving transportation infrastructure and stabilizing the exchange rate – with further emphasis on implementation, monitoring and evaluation of these aforementioned economic goals.

While reacting on the pricing, Minister of Finance, Mrs Kemi Adeosun said: “The proceeds from this additional note issuance will go towards funding capital projects in the 2016 budget. Infrastructure spending is at the heart of our National Economic Recovery and Growth Plan, which was released earlier this month and guides how we will deliver the urgent reform our economy needs between now and 2020. ”

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More so, the Director General, Debt Management Office, DMO, Dr Abraham Nwankwo, said: “Following the success of our US$1 billion note issuance in February, Nigeria is delighted to have increased our 2017 Eurobond programme to US$1.5 billion and to have secured the additional US$500 million. Nigeria was keen to take advantage of favorable market conditions and investor appetite for Nigerian debt to complete our foreign borrowing programme for the 2016 budget and deliver further funds for vital capital projects.”
Credits: Vangaurd, stingged.com

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