26 February 2018

Nigeria: U.S. Investors Crowd Nigeria's $2.5bn Eurobond

The Debt Management Office (DMO) has released the details of the $2.5 billion Eurobond showing that the bulk of the bond had been picked up by assets managers from the United States of America.

Data released by the debt office at the weekend show that investors from the US accounted for 55 and 59 per cents of the $1.25 billion 12 year Eurobond and the $1.25 billion 20 year Eurobond respectively.

The DMO had raised the 12 year Eurobond maturing February 23, 2030 at 7.143 per cent per annum. The 12 year paper which had a B Stable, B+ Neg and B2 Stable ratings from Standard and Poors, Firtch Ratings and Moody's Ratings had been oversubscribed by 432 per cent to the tune of $5.4 billion.

Likewise the $1.25 billion 20 year Eurobond maturing February 23, 2038 was oversubscribed by 472 per cent to the tune of $5.9 billion. The paper which was raised at 7.696 per cent per annum interest had been rated B Stable, B+ Neg and B2 Stable ratings from Standard and Poors, Firtch Ratings and Moody's Ratings respectively.

While investors from the US had taken up 55 per cent of the 12 year paper, investors for the United Kingdom accounted for 32 per cent and just as other European countries account for 11 per cent. Other countries outside the US and Europe accounted for only two per cent of the bond takings.

Investors in the US also dominated the 20 year Eurobond taking up 59 per cent while UK, other European countries and other countries accounted for 28, 12 and one per cent of the bond.

Allocation by investor category showed that asset managers took up 81 per cent of the two Eurobonds while hedge fund managers took 13 and 14 per cent respectively of the 12 and 20 year paper. Insurance and pensions fund managers took three per cent each while banks and private banks took three and two per cent of the 12 and 20 year Eurobonds respectively.

The government is raising the Eurobond to 2.5 billion Eurobond to refinance some of Nigeria's treasury bill portfolio as proceeds from the bond sale would be converted to naira and used to redeem a more expensive local debt, thereby improving the government's debt service ratio.

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