Nigeria succeeded in raising $2.2 billion in its first Eurobond issuance since February 2022, drawing significant investor interest with demand more than four times the amount offered.
Nigeria succeeded in raising $2.2 billion in its first Eurobond issuance since February 2022, drawing significant investor interest with demand more than four times the amount offered. The country issued two bonds: a 6.5-year bond with a 9.625% yield and a 10-year bond priced at 10.375%. According to the Debt Management Office, the shorter-term bond raised $700 million, while the longer-term bond secured $1.5 billion.
The sale saw a remarkable peak of over $9 billion in the order book, reflecting strong demand from a diverse pool of investors, including fund managers, pension and insurance funds, hedge funds, banks, and other financial institutions. This overwhelming response highlights Nigeria’s return to the international debt market after a challenging period.
Africa’s largest economy had been largely excluded from global markets for two years due to rising debt pressures and increasing borrowing costs. Nigeria’s successful Eurobond sale follows similar moves by other African countries such as Benin, Ivory Coast, Kenya, and South Africa, signaling a broader recovery in access to international capital for the region.
The strong reception of Nigerian bonds can be attributed to the economic reforms initiated by President Bola Tinubu’s administration over the past 18 months. Key measures such as a more flexible exchange rate, the removal of fuel subsidies, and an aggressive interest rate policy aimed at combating inflation have strengthened investor confidence. These reforms have been praised by international financial institutions such as the World Bank and the IMF, though they have sparked protests internally due to their impact on the country’s vulnerable populations.
Proceeds from the Eurobond issuance will be used, as stated in President Tinubu’s recent proposal to lawmakers, to help cover part of the projected budget deficit of 9.18 trillion nairas ($5.86 billion) for the current fiscal year.
The transaction was led by a consortium of global financial institutions, including Chapel Hill Denham, Citigroup, Goldman Sachs, JPMorgan Chase, and Standard Chartered, with FSDH Merchant Bank serving as the financial advisor.
This issuance follows Nigeria’s postponement of a planned $950 million Eurobond sale in May 2022 due to unfavorable market conditions. The government also postponed another Eurobond issuance earlier this year, opting instead to raise $900 million locally at a 9.67% yield. The recent successful sale marks a positive shift in Nigeria’s financial outlook and reaffirms investor confidence in the country’s ongoing economic transformation.
