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Tag: Eurobond

  • Osinbajo writes NASS, seeks approval of $500m Eurobond to fund 2016 budget

     

    Acting President, Prof Yemi Osinbajo has written to the National Assembly, seek ing its approval to issue a Eurobond debt instrument of $500 million to fund the implementation of the 2016 budget, which runs it may 2017.

    The $500 million bond, according to the acting president, would be issued between February and March 2017, subject to market conditions, in order to meet government’s approved capital expenditure funding plan.

    In the letter read by Speaker Yakubu Dogara at Wednesday’s plenary, Osinbajo noted that items 229 and 244 of the 2016 appropriation act, provided for a deficit of N2, 204.742 billion and new borrowings of N1, 818, 675 billion, adding that the Act also provides for domestic borrowing of N1,182,798 billion and external borrowing of N635.877 billion in items 245 and 246.

    He said while “the approved domestic borrowing has been fully incurred, the N635.877 billion external borrowing has not been fully accessed.

    The external borrowings incurred to date consist of $600million from the African Development Bank and USD 1 billion Eurobond from the international capital market only.

    “Thus, based on the 2016 appropriation and applying the average exchange rate, there is headroom to access further international funds”

    The acting president said: “Following the high oversubscription to the recent USD 1 billion Eurobond issuance, we wish to take advantage of favourable market conditions to issue a Eurobond debt instrument of USD 500 million to fund the implementation of the 2016 budget, which is still ongoing.

    “The Rt. Honourable Speaker may wish to note that in line with the requirement of securities issuances in the ICM, a specific resolution of the National Assembly, as a firm confirmation of the approval of the legislature for the Federal Government of Nigeria to borrow the USD 500 million through the issuance of a Eurobond debt instrument in the ICM is required.”

    The letter continued: “The Rt. Honourable Speaker may wish to note that the proceeds of the Eurobond are to be used as funding sources to finance the budget deficit, including capital expenditure projects as specified in the 2016 appropriation act.

    “With respect to the terms and conditions of the Eurobond, the legislature may wish to note that being a market-based instrument, the terms and conditions of the Eurobond may only be determined at the point of issuance.

    “It is important to note that the previous issuances are USD 500 million, USD 1 million (consisting of two tranches of USD 500 million) and USD 1 billion in January 2011, July 2013 and February 2017, respectively, were issued at coupons of 6.75%, 5.125%, 6.375% and 7.875% based on the prevailing market conditions.

    “The Debt Management Office and the Federal Government are appointed transaction parties to the issue and are committed to working assiduously to securing the best terms and conditions for the Federal Republic of Nigeria.

    “Accordingly, the Rt. Honourable Speaker is requested to kindly approve by resolution of the National Assembly the issuance of USD 500 million Eurobond in the international capital market for the funding of the budget.”

     

  • Nigeria’s $1b Eurobond oversubscribed at 7.875% interest rate – Adeosun

    The Minister of Finance, Mrs. Kemi Adeosun has said the country’s $1 billion Eurobond offered in the international market has been oversubscribed at an interest rate of 7.875%.

    She said the Notes were approximately 8 times oversubscribed with orders in excess of US$7.8 billion compared to a pre-issuance target of US$ 1.0 billion.

    According to her, this demonstrated strong market appetite for Nigeria.

    “This is despite continued volatility in emerging and frontier markets and shows confidence by the international investment community in Nigeria’s economic reform agenda.”

    The bond will mature on 16th February 2032 with a bullet repayment of the principal.

    Adeosun and Central Bank Governor, Mr. Godwin Emefiele, Budget Minister, Senator Udoma Udo Udoma as well as other top officials of the Debt Management Office went on a roadshow from last week through this week, which took them to global financial institutions in Europe, Southern Africa and the United States to promote the bond.

    This was revealed in a statement by the Finance ministry. The statement reads in details:

    “Announcement of pricing of US$1 billion notes by the Federal Republic of Nigeria under its US$1 billion Global Medium Term Note programme

    The Federal Republic of Nigeria (the “Republic”) today announces that it has priced its offering of US$1 billion aggregate principal amount of notes (the “Notes”) under its newly established US$1 billion Global Medium Term Note programme. The Notes will bear interest at a rate of 7.875% and will mature on 16th February 2032 with a bullet repayment of the principal. The Republic intends to use the proceeds of the Notes to fund capital expenditures in the 2016 budget. The Notes represent the Republic’s third Eurobond issuance, following issuances in 2011 and 2013.

    The Notes were approximately 8 times oversubscribed with orders in excess of US$7.8 billion compared to a pre-issuance target of US$ 1.0 billion demonstrating strong market appetite for Nigeria. This is despite continued volatility in emerging and frontier markets and shows confidence by the international investment community in Nigeria’s economic reform agenda.

    The offering attracted significant interest from leading global institutional investors. 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. The Republic will 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 Mrs. Kemi Adeosun, the Honorable Minister of Finance, Senator Udoma Udo Udoma, the Honorable Minister of Budget and National Planning, Godwin Emefiele, Governor of the Central Bank of Nigeria, Dr. Abraham Nwankwo, the Director-General of the Debt Management Office (DMO) and Mr Ben Akabueze, the Director General of the Budget Office, to key global financial centres.

    Commenting following the successful pricing, the Honorable Minister of Finance Mrs Kemi Adeosun said:

    “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. At the heart of the agenda is a commitment to invest in developing Nigeria’s infrastructure through a target 30% annual budget commitment to capital expenditure. We are establishing the building blocks for long-term growth and making the hard decisions that must be made to reset our economy appropriately.”

     

     

  • FG appoints Transaction Parties for execution of $1bn Eurobond programme

    FG appoints Transaction Parties for execution of $1bn Eurobond programme

    The Honourable Minister of Finance, Mrs Kemi Adeosun on Wednesday at the Federal Executive Council (FEC) meeting presented a Memorandum seeking approval for the issuance of the USD1.00 Billion Eurobond in the International Capital Market (ICM) and the appointment of Transaction Parties responsible for the execution of the Programme.

    The Minister noted that the USD1.00 Billion Eurobond issuance was appropriated in the 2016 Budget and the funds will support the implementation of capital projects in the 2016 budget.

    The appointed Transaction Parties responsible for execution of the transaction include: Citigroup, Standard Chartered Bank, Stanbic IBTC Holdings PLC, White & Case LLP, Banwo & Ighodalo and AfricaPractice.

    She stated that the selection was based on an open and competitive bid process in line with the Public Procurement Act, 2007 and a certificate of “No Objection” was received from the Bureau of Public Procurement (BPP) to award contracts to the recommended Parties.

    “We have so far, received strong commitment from the international community. Investors believe in the long-term economic outlook for Nigeria as we continue with our structural reforms and increased focus on infrastructure development to diversify the economy and grow the non-oil sector”, she stated.

    “Stable oil prices and steadying foreign reserves will support our plans and we expect high demand for this issue to further push down yields. We are confident that this will be a successful outing in January, 2017.”