Eurobond issuance oversubscribed by $9bn, as Nigeria returns to int’l capital market
…Issues two Eurobonds to plug 2024 budget deficit
By Seun Ibiyemi
Nigeria has successfully returned to the international bond market after a two-year hiatus, issuing two significant Eurobond offerings to help plug the country’s 2024 budget deficit.
The Federal Republic of Nigeria launched a dual-tranche Eurobond offering under its Global Medium Term Note Programme, raising a total of $2.2 billion. The issuance, which opened and closed on December 2, 2024, was met with an overwhelming response, with the offering oversubscribed by more than four times, receiving more than $9 billion in demand.
The Nigerian government sold $700 million of a 6.5-year Eurobond maturing in 2031, with a coupon rate of 9.625%, and $1.5 billion of a 10-year Eurobond at 10.375%. These bonds will be issued in U.S. dollars, with semi-annual coupons, and will be listed on the London Stock Exchange’s Main Market.
The transaction is set to settle on December 9, 2024, with denominations starting at $200,000 and multiples of $1,000 thereafter.
This issuance marks Nigeria’s first return to the international capital market since March 2022, when the country raised $1.25 billion at a rate of 8.375% through a seven-year Eurobond. The latest sale will provide much-needed funding to bridge the country’s widening fiscal deficit, which has been exacerbated by disruptions in crude oil production, low tax revenues, and insufficient economic diversification.
The Debt Management Office (DMO) confirmed that Nigeria successfully priced the $2.2 billion in Eurobonds, which were placed in two maturities: $700 million in 2031 and $1.5 billion in 2034. The DMO also highlighted the strong demand from a diverse range of investors, including fund managers, insurance and pension funds, hedge funds, banks, and other financial institutions from across multiple regions, including North America, the UK, Europe, Asia, the Middle East, and Nigeria itself.
The government has expressed its satisfaction with the investor interest, viewing it as a sign of continued confidence in Nigeria’s macroeconomic policies and fiscal management.
In his remarks, the Coordinating Minister of the Economy and Minister of Finance, Mr. Wale Edun, noted that the success of the issuance reflected growing confidence in the administration’s efforts to stabilise the Nigerian economy and position it for sustainable growth.
“The broad range of investor appetite to invest in our Eurobonds is encouraging as we continue to diversify our funding sources and deepen our engagement with international capital markets,” Edun said.
Commenting on the Notes’ pricing, the Director-General of the Debt Management Office (DMO), Patience Oniha said, “With the successful pricing of the Notes on intra-day basis, Nigeria has registered a landmark achievement in the international capital market.
“The size of the Orderbook at approximately 4.18x of the offer amount, and the strong and diverse investor base helped to price the new 6.5-yr at 9.625%, while new 10-year Notes was priced at 10.375%. The DMO remains committed to maintaining transparency and open communication with investors and stakeholders and appreciates the continued confidence and support of the the international and Nigerian investors who participated in the pricing.”
The Governor of the Central Bank of Nigeria, Olayemi Cardoso, further underscored the success of the issuance, highlighting that it reflected the growing confidence in Nigeria’s creditworthiness and the country’s improved liquidity position, as well as continued access to international markets to support the government’s financing needs.
The bonds were issued in 144A/Reg S format, making them accessible to both U.S. and international investors. The proceeds will primarily be used to finance Nigeria’s 2024 fiscal deficit, supporting the government’s budgetary needs and helping to address the country’s economic challenges.
The Eurobond sale was managed by a consortium of international and domestic financial institutions, including Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., and Standard Chartered Plc. Chapel Hill Denham Advisory Limited acted as the Nigerian bookrunner, with FSDH Merchant Bank Limited serving as the financial adviser on the issuance.
The success of this Eurobond issuance demonstrates Nigeria’s ongoing efforts to tap into international capital markets and diversify its funding sources, while also showcasing the confidence that investors have in the country’s economic recovery and fiscal policies.
