The plan by the federal government for a Eurobond issuance in the International Capital Market (ICM) has been described as a step in the right direction.
Managing Director, Ecobank Nigeria, Patrick Akinwuntan, gave the commendation, stressing that the fundamentals and potential of the nation’s economy are strong with the capacity to meet its debt obligations.
Akinwuntan, who was assessing the global market as Nigeria makes its announcement of multibillion-dollar Eurobond offering, during an interview on Arise TV Lagos, said the economy is showing strong trends owing to investments in infrastructure such as road and rail transportation.
He added that the private sector is also making remarkable improvements in the power sector, telecoms, and information technology.
“You look at the fundamentals. What is the story of this economy? You look at Nigeria, the fundamentals are strong, coming from the lessons learnt in being a mono-product economy which was dependent on oil.
“We have since embarked on the journey of diversification and we are beginning to show early fruits. Exports are improving. Africa Continental Free Trade Area (AfCFTA) provides the opportunity to expand that even further.
“So, you look at the fundamentals, look at the openness of the economy, the transparency of reporting and look at the opportunities to enhance real growth.”
He observed that international borrowing will allow Nigeria as a country to access more foreign currencies, deepen external reserves, and allow more confidence in the medium-term planning in the private sector.
“It also gives more room for the local economy to be able to breathe a bit more because when the country takes on Euro bond that portion is reduced from local country financing or public sector debt within the country. All these factors play strongly to the benefit of the private sector and the entire economy at large.
“In the last two quarters, we have seen the global market rebounding from the very deep end of the COVID-19 that plagued 2020. We have seen, since the arrival of vaccines, the gradual opening of the global economy such that there is much more optimism now in the market because we have learnt that shutting down the economy is not the best way to handle an epidemic and we have seen support from sovereigns ensuring that there is steady growth within the various economies.”
Citing example with Ecobank’s $300 million Eurobond offer earlier in the year which was oversubscribed by 300 per cent, Akinwuntan advised those approaching the international debt market to have clarity of purpose and state clearly their strengths and weaknesses.
“We are the first banking entity in Africa to do that in 2021 and it comes from our long-term planning in the economy of Africa. We are the pan-African bank and when we look at Africa. Nigeria is a major player. Quickly we understood that arising from a scenario of pandemic and all-time lows of 2020 is time to look at the brighter side and we stepped out for the $300m US Eurobond offer which met a positive response from investors across the globe within the country.
“We attracted more than three times in subscription. But we kept to the book of doing $300 million because it is based on our plan of participating in positioning Nigeria as the leading export country in the AFCTCA environment in the continent and giving our unique position as the Pan African bank, it was very clear to us and the market responded positively.
“Our experience also tells us that what is critical is to have clarity on your strength, be very frank about your weakness or the areas of concern and how you intend to handle that positively.”