Despite wariness over the security situation in Nigeria, Africa’s second largest economy, the country’s $1 billion Eurobond offering targeted at being used to finance power projects was four times oversubscribed this past Tuesday due to high investor demand.
“We’re very happy that at this time, when the markets are exhibiting turbulence, we were able to (achieve) … four times oversubscription,” Nigeria’s Finance Minister, Dr. Ngozi Okonjo-Iweala said to journalists after the bond issue.
“The coupon shows confidence in the Nigerian economy,” she said. “We saw a window of opportunity … appetite for our paper was strong,” she continued.
“The quality of the investors is very high, the majority of the investors are from the United States, then followed by Europe, especially the United kingdom, and then Asia, so those are the top three investors and it is a long list, and because it was oversubscribed we could not even meet the demand of some them. Over 200 investors were not able to get any share of the issue because it was oversubscribed,” she said.
As you know, this money is designed to support infrastructure projects within the country. It is not for budget support but directly for infrastructure…We are going to try and make sure that these investments are visible ones that Nigerians can see to ensure this money is utilised in a proper way.
The issue was subscribed by top financial asset managers namely HSBC, Global Asset Management, Wellington Management Company and Blackrock among others.
According to IFR, a Thomson Reuters analysis service, “Nigeria issued a $500 million 5-year bond at a yield of 5.375 percent and a $500 million 10-year bond with a yield of 6.625 percent.”
As of March 2013, according to Nigeria’s Debt Management Office (DMO), its total debt stands at 17 percent of GDP comprising about N6.5 trillion in domestic debt and $6.67 billion in foreign debt.
In addition, the country’s budget deficit is estimated to narrow to 1.85 percent of GDP in 2013.
Plans are currently underway to float a $100 million Diaspora bond targeted at Nigerians living abroad who want to invest in the country.