Nigeria to issue $500 million domestic dollar bond on Monday

From Nairametrics: 

Nigeria to issue $500 million domestic dollar bond on Monday 

The Federal Government of Nigeria plans to issue its dollar-denominated domestic bond next week Monday, as it hopes to raise $500 million from local and foreign investors.  

Dr Gbadebo Adenrele, Managing Director of Investment Banking, at United Capital Group, disclosed this during a hybrid roadshow with investors organised by the Debt Management Office (DMO) on Thursday. Adenrele said: “The auction will open next week on Monday. Next week Monday, we will have that open, and the details of that will be communicated to the market.” This dollar bond is the first of its kind in the country, with the bond offering bullet repayment at maturity in US dollars and full repayment of the principal amount at the end of the five-year term. 

In his presentation earlier, Adenrele said: “One of the key aspects of this bond issuance is that it will be listed on platforms such as the Nigerian Exchange and FMDQ, making it accessible to a variety of investors. “The principal will be repaid after five years, with interest payments made every six months. This structured repayment schedule is designed to provide confidence to investors.”

We are imminently about to launch – finance minister Wale Edun, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, affirmed that the country alongside its financial advisors is ready to launch the bond. Edun said: “In the financial market, you never know. When you wake up and you see an event that helps the issue, you will take advantage of it. But we can assume that we are imminently about to launch. We are eagerly looking forward to not just the funds but the experience of Nigerians taking leadership in this all-important area. We must also mention that it is another arrow in the quiver.” He further stressed that the bond is a strategic move to channel funds into sectors that will catalyse economic growth in the country.

The Director General of the Debt Management Office (DMO), Patience Oniha, noted that the settlement date for the domestic dollar bond auction will likely be in 10 days after the auction date.

What you should know

Nairametrics earlier reported that the Federal Government of Nigeria launched its Series I Domestic USD Bond, as it hopes to raise at least $500 million from local and international investors. 

According to the auction circular seen by Nairametrics, the federal government hopes to double its offer amount as it targets $1 billion in subscriptions through this bond auction. According to the circular, the bond program has a total size of up to $2.0 billion, which can be upsized depending on the issuer’s discretion. 

Investors can subscribe with a minimum amount of $10,000, with additional investments in multiples of $1,000 thereafter. 

The circular noted that the net proceeds from the bond will be ring-fenced and invested in critical sectors approved by the President on the recommendation of the Minister of Finance, subject to appropriation by the National Assembly (NASS). 

The bond is exempt from income tax on the interest payable to bondholders. Additional exemptions are provided as specified in the exemption notice issued by the Federal Inland Revenue Services (FIRS). 

The bond will be listed and admitted for trading on the Nigerian Exchange Limited (NGX) and the Financial Market Dealers Quotation (FMDQ), providing liquidity and accessibility to a broad range of investors.

News source: Nairametrics