- FG heralds pricing of US$1.5bn 10-year; US$1.5 billion 30-year notes under Global Medium Term Note programme
BY EDMOND ODOK, ABUJA – Confidence building in the Nigerian economy continued its upward surge with the Federal Government announcing on Monday that it has priced its offering of US$3 billion aggregate principal amount of dual series notes under its US$4.5 billion Global Medium Term Note programme.
Representing an increase from US$1.5 billion, the Notes consist of a US$1.5 billion 10-year series and a US$1.5 billion 30-year series.
This is just as the Minister of Finance, Mrs Kemi Adeosun assured that the President Muhammadu Buhari-led administration will deploy the Notes’ proceeds to fund the approved budgetary expenditures and refinance existing domestic debt, as may be necessary.
According to the Federal Ministry of Finance, 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.
With significant interests coming from leading global institutional investors, the offering is expected to close on or about November 28, 2017, subject to the satisfaction of various customary closing conditions.
A statement by Oluyinka Akintunde, Special Adviser, Media and Communications to the Finance Minister, further explained that 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.
It also said Nigeria is now in a position to apply for the Notes to be eligible for trading and listed on the Nigerian FMDQ OTC Securities Exchange and the Nigerian Stock Exchange.
The statement said the pricing good news came on the heels of a road-show led by the Finance Minister, Mrs Kemi Adeosun; with the Minister of Budget and National Planning, Senator Udoma Udo Udoma; Governor of the Central Bank of Nigeria, (CBN), Godwin Emefiele; Director-General of the Debt Management Office (DMO), Ms Patience Oniha, and Director-General of the Budget Office of the Federation, Mr Ben Akabueze on the train.
Mrs Adeosun, who expressed happiness over the development, said the Notes represent Nigeria’s fourth Eurobond issuance, following issuances in 2011, 2013 (two series) and earlier in 2017.
She said that; “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.”
The Minister also maintained that “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”, she said.
In her remarks on the Notes’ pricing, 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.”
Giving further explanations, Ms Oniha said; “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”, adding that; “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.”
The DMO boss, who expressed satisfaction with international investors’ recognition of Nigeria’s huge potential, stated that; “Perhaps, even more important is that with this dual tranche issuance the objective of reducing the cost of government borrowing has been achieved.”
