Nigeria

Nigerian government raises $4 billion through eurobonds to finance 2021 budget deficit

Debt Management Office (DMO)

The Debt Management Office (DMO) says the federal government raised $4 billion through Eurobonds.

The amount, the agency said it was raised after an intensive two days of virtual meeting with investors across the globe.

The federal government had listed its $3 billion Eurobond in three tranches for investors, offering up to 8.6 per cent for a 30-year tenor.

It also appointed JP Morgan, Chapel Hill Denham and six others as transaction advisers for the issuance.

In a statement issued on Tuesday night, DMO explained that the order book peaked at $12.2 billion, which enabled the federal government of Nigeria (FGN) to raise $1 billion more than the $3 billion it initially announced.

“This exceptional performance has been described as “one of the biggest financial trades to come out of Africa in 2021” and “an excellent outcome,” the statement reads.

“Bids for the Eurobonds were received from investors in Europe and America, as well as Asia. There was also good participation by local investors.”

According to the DMO, the size of the order book and the quality of investors demonstrated confidence in the Nigerian economy.

The Eurobonds were issued in three tranches — seven-year $1.25 billion at 6.125 per cent per annum; 12-year $1.5 billion at 7.375 per cent per annum; and 30-year $1.25 billion at 8.25 per cent per annum.

The DMO said the long tenors of the Eurobonds and the spread across different maturities are well aligned with Nigeria’s Debt Management Strategy, 2020-2023.

“Since the Eurobonds were issued as part of the new external borrowing in the 2021 Appropriation Act, the raising of $4bn through Eurobonds provides a significant amount of funds to finance projects in the Act, thus contributing to the implementation of the 2021 Appropriation Act,” it added.

The Eurobond is part of the federal government’s borrowing plans to finance part of the 2021 budget deficit.

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