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Nigeria’s $1bn Eurobond Records Eight Times Oversubscription

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  • Nigeria’s $1bn Eurobond Records Eight Times Oversubscription

The federal government yesterday announced that its US$1 billion Eurobond was 780 per cent oversubscribed, demonstrating a strong market appetite for Nigeria.

The government also revealed that the newly established US$1 billion Global Medium Term Note programme will bear interest at a rate of 7.875 per cent and will mature on 16th February 2032, with a bullet repayment of the principal.

The success of the Eurobond is bound to put a lot of analysts, who had expressed concerns that Nigeria’s recent downgrade by ratings agencies and uncertainty over oil output and currency controls might dampen investor appetite, to shame.

Nonetheless, the yield of 7.875 per cent on the $1 billion Eurobond showed that investors priced in the risk of the credit downgrade by Fitch recently.

Nigeria intends to use the proceeds of the notes to fund capital expenditure in the 2016 budget.

A statement signed by the Director Information in the Ministry of Finance, Mr. Salisu Na’inna Dambatta said: “The development was clearly a sign of renewed confidence in the economy which has been hurt by the slump in crude oil prices.”

The notes, according to a statement last night, represented the country’s third Eurobond issuance, following issuances in 2011 and 2013.

“The notes were approximately eight times oversubscribed with orders in excess of US$7.8 billion compared to a pre-issuance target of US$1 billion, demonstrating strong market appetite for Nigeria.

“This is despite continued volatility in emerging and frontier markets and it 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 statement said.

In addition, the federal government will apply for the notes to be eligible for trading and listed on the FMDQ OTC Securities Exchange and the Nigerian Stock Exchange.

The pricing was determined following a roadshow led by the Minister of Finance, Mrs. Kemi Adeosun; Minister of Budget and National Planning, Senator Udoma Udo Udoma; Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele; Director General of the Debt Management Office (DMO), Dr. Abraham Nwankwo; and Director General of the Budget Office, Mr. Ben Akabueze.

Commenting on the successful pricing, 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 per cent 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.”

Nwankwo said: “Nigeria is delighted to have successfully priced its third Eurobond issue. We have successfully extended the tenor of our borrowing programme in the international capital markets to 15 years, at a price that reflects belief in the quality of Nigeria’s cash flows and government.

“The Eurobond is the latest step in a broader debt strategy designed to significantly re-balance our debt profile towards longer term financing and reduce the burden of interest on our annual budgets,” he stated.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Banking Sector

CBN to Extend Credit Risk Management System to OFIs

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In an effort to curb growing bad debt, the Central Bank of Nigeria has said it will extend its Credit Risk Management System to Other Financial Institutions (OFIs) operating in Nigeria to protect them from bad debtors.

According to the apex bank, this is important following the successful implementation of the credit risk system in other lending institutions operating in Nigeria.

The bank disclosed this in a circular titled ‘Credit Risk Management System: Commencement of enrolment of all Development Finance Institutions, Microfinance Banks, Primary Mortgage Banks and Finance Companies’ and signed by Kelvin Amugo, the Director, Financial Policy and Regulation Department, on Monday.

In part, the circular read, “As part of efforts to promote a safe and sound financial system in Nigeria, the CBN introduced the CRMS to improve credit risk management in commercial, merchant and non-interest banks as well as to prevent predatory borrowers from undermining the banking system.

“With the successful implementation of the CRMS in deposit money banks, it has become expedient to commence the enrolment of Other Financial Institutions on the CTMS platform.

“Accordingly, all DFIs, MfBs, PMBs and FCs are required to report all credit facilities (principal and interest) to the CRMs and to update same on monthly basis.

“OFIs shall note the Bank Verification Numbers and Tax Identification Numbers are the only basis for regulatory renditions”.

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Banking Sector

BoI Grows Assets by 78.8% to N1.86 Trillion

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The Bank of Industry Group concluded the 2020 financial year with a 78.8 per cent growth of assets from N1.04tn to N1.86tn between 2019 and 2020.

A statement by the bank on Monday said the increase was driven to a large extent by the successful debt syndication of €1bn and $1bn that were concluded in March and December 2020 respectively.

BoI stated that the group’s financial statement demonstrated resilience and strength, noting that the period had significant challenges in the operating environment on account of the impact of COVID-19 pandemic on the economy.

“It also indicates synergy with the various interventions developed by the Federal Government, the Central Bank as well as other strategic partners towards ameliorating the impact of the pandemic on Nigerian enterprises,” the statement said.

The group’s total equity increased by 14.8 per cent from N293.08bn in the previous year to N336.48bn in 2020.

It added that as a reflection of the adverse impact of the challenging operating environment on growth of new facilities, loans and advances grew marginally in 2020 by 1.3 per cent to N749.84bn from the 2019 position.

The bank explained that this was largely due to the economic slowdown in the year as well as the various interventions and support initiated by the bank for its customers.

“The bank reviewed and restructured all its managed projects under the CBN intervention programme with interest rate reduction from nine to five per cent per annum for a period of one year and moratorium extension of three months (with a possible extension up to 12 months),” it said.

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Banking Sector

TAJBank Deploys NQR Solution To Ease Customer Transactions

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TAJBank, Nigeria’s non-interest bank, has announced the deployment of the NQR Payment solution, an indigenous Quick Response Code (QRC) by the Nigeria Interbank Settlement Scheme (NIBSS), for merchants and customers as the newest addition to its innovative e-business channels.

The NQR Payment solution is a secure QR-code-based payments and collections platform developed for merchants and customers to receive and make payments for goods and services in a quick, easy, contactless and secure manner.

A statement signed by the Founder/Chief Operating Officer of the bank, Mr. Hamid Joda, indicated that the ingenious solution would further drive TAJBank’s culture of innovation and create a seamless payment experience for its rapidly growing individual and corporate customers in their banking transactions.

“We are excited to have this payment channel introduced into the nation’s financial system as an addition to other innovative solutions we have deployed over the past few months.

This is a proof that, as we have said in our communications signature line, TAJBank’s interest is always in our customers”, Joda enthused.

In his remarks, the non-interest lender’s Chief Marketing Officer/Co-Founder, Mr. Sherif Idi, also maintained that the deployment of the NQR payment solution would revolutionize the e-payment experience and open new frontiers for small, medium and large scale businesses who are major stakeholders of the bank.

Since it commenced operations in the non-interest banking segment of the financial services industry, TAJBank is noted for its impeccable track record of growth and innovation, rendering exceptional quality services to customers.

The lender’s NQR solution is open to all customers of the bank, both merchants and individuals, across all its branches and digital channels globally.

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