Nigeria's $1 billion Eurobond oversubscribed by 700 per cent

10 Feb 2017
Financial Nigeria


Investors placed orders of about $7.8 billion – a 700 per cent oversubscription – for the bond issue.

Nigerian Minister of Finance Kemi Adeosun

Foreign investors have demonstrated their confidence in Nigeria’s long-term prospects as they overwhelmingly subscribed to the country’s $1 billion Eurobond. Investors placed orders of about $7.8 billion – a 700 per cent oversubscription – for the bond issue, which has an interest rate of 7.875 per cent and will mature on February 16th, 2032, according to a statement from the Federal Ministry of Finance on Thursday.

“The notes were approximately 8 times oversubscribed . . . demonstrating strong market appetite for Nigeria,” said the Federal Ministry of Finance. “This is despite continued volatility in emerging and frontier markets and shows confidence by the international investment community in Nigeria’s economic reform agenda.”

The federal government said it plans to use the proceeds of the Eurobond to fund its budget deficit. Nigeria’s 2017 budget of N7.298 trillion has a fiscal deficit that is estimated to reach N2.36 trillion, up from N2.2 trillion last year. Capital expenditure is expected to gulp N2.24 trillion in 2017, up from N1.6 trillion last year.

“Nigeria is implementing an ambitious economic reform agenda designed to deliver long-term sustainable growth and reduce reliance on oil and gas revenues while reducing waste and improving the efficiency of government expenditure,” Kemi Adeosun, the Minister of Finance, said. “At the heart of the agenda is a commitment to invest in developing Nigeria’s infrastructure through a target 30% annual budget commitment to capital expenditure.”

The latest Eurobond would be the first time that Nigeria has raised funds from international financial markets since July 2013 after an inaugural issue in 2011. According to the Ministry of Finance, the notes will be admitted to the official list of the UK Listing Authority and will be available for trade on the London Stock Exchange’s regulated market. The ministry said it would also apply for the bond to be listed on Nigeria’s FMDQ OTC Securities Exchange as well as the Nigerian Stock Exchange.

"We are establishing the building blocks for long-term growth and making the hard decisions that must be made to reset our economy appropriately,” the minister said.

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