FG floats $3bn dual-tranche bond

The Federal Government, on Monday, announced that it had floated a $3 billion dual-tranche bond.
It said that the pricing of the $1.5 billion 10-year and $1.5 billion 30-year notes were under its Global Medium Term Note programme

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The Federal Government said that it had priced the offering of the $3 billion aggregate principal amount of dual series notes under its $4.5 billion Global Medium-Term Note programme (increased from US$1.5 billion).
The 10-year series will bear interest at a rate of 6.5 per cent, while the 30-year series will bear interest at a rate of 7.625 per cent repayable with a bullet repayment of the principal on maturity.
The Federal Government said that the offering had attracted significant interests from leading global institutional investors and would be expected to close on or about Nov. 28, subject to the satisfaction of various customary closing conditions.
“When issued, the Notes will be admitted to the official list of the UK Listing Authority and available to trade on the London Stock Exchange’s regulated market.
“Nigeria may apply for the Notes to be eligible for trading and listed on the Nigerian FMDQ OTC Securities Exchange and the Nigerian Stock Exchange.
“The pricing was determined following a roadshow led by the Minister of Finance, Mrs. Kemi Adeosun, the Minister of Budget and National Planning, Senator Udoma Udo Udoma, Governor of the Central Bank of Nigeria, Godwin Emefiele, the Director-General of Debt Management Office (DMO), Ms. Patience Oniha, and the Director-General of the Budget Office of the Federation, Mr Ben Akabueze.
The statement quoted the Finance Minister as saying that the government would utilise the proceeds of the Notes to fund approved budgetary expenditures and for refinancing of domestic debt as might be applicable.

According to her, the Notes represent the Nigeria’s fourth Eurobond issuance following issuances in 2011, 2013 (two series) and earlier in 2017.
“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.
“Our economy is beginning to recover, Gross Domestic Product (GDP) having returned to growth in 2017, but we must maintain the momentum behind our investments in order to further drive growth.
“That is why we are and will continue to focus investment on the enabling infrastructure we need to broaden economic productivity.

“Successfully extending out debt profile in the international market to 30 years is a key element of that strategy as it establishes a basis for the longer term financing required for transformational infrastructure investment.
“As we have always stated, we are progressively replacing debt with revenue which is reflected in the 2018 Budget proposal.
“We are establishing the building blocks for inclusive growth and beginning to see the results of the hard decisions that have been made to reset our economy appropriately.”
Commenting on the Notes’ pricing, the DMO Director-General, Patience Oniha, said: “with the successful pricing of our 4th Eurobond, Nigeria has become one of the few African issuers whose securities have attracted strong investor interest, amongst institutional investors across the globe.
“This time, Nigeria issued a new 10-year bond at a yield of 6.500% and a 30-year benchmark priced at a yield of 7.625%, which despite the longer tenure remains cheaper than our 15-year issuance earlier this year.
“The 30-year is a landmark as the tenor represents the first by a sub-Saharan country other than South Africa and importantly establishes the basis for long term infrastructure funding which is a priority for this government”.


Oniha expressed satisfaction with international investors’ recognition of Nigeria’s huge potential.

“Perhaps even more important is that with this dual tranche issuance the objective of reducing the cost of government borrowing has been achieved,” she said.