Connect with us

Economy

Nigeria Consolidates $500m Eurobond with $1bn Issue

Published

on

Federation Account Allocation Committee
  • Nigeria Consolidates $500m Eurobond with $1bn Issue

Nigeria disclosed on Wednesday that its $500 million notes under the $1.5 billion Global Medium Term Note programme will be consolidated to form a single series with the existing $1 billion notes, which the country issued in February and will mature by 2032.

The federal government therefore announced that it has priced its offering of the $500 million aggregate principal amount of notes at a yield of 7.5 per cent under the $1.5 billion (increased from US$1 billion) Global Medium Term Note Programme.

This, according to a statement by the Ministry of Finance, will be consolidated and form a single series with the existing $1 billion 7.875 per cent notes due in 2032.

The N1 billion notes (Original Notes) were issued on February 16. The terms and conditions of the $500 million notes, said the statement, will be identical to those of the Original Notes, paying a coupon of 7.875 per cent per annum and maturing on February 16, 2032.

They will be repayable by way of bullet repayment of the principal together with the Original Notes, the statement added.

“As with the Original Notes, the government intends to use the proceeds of the ($500 million) notes to fund capital expenditures in the 2016 budget.

“The successful pricing, which is priced 37.5bps inside the original coupon rate, demonstrates continued strong market appetite for Nigerian securities.

“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 statement issued by the Director, Information, Ministry of Finance, Mr. Salisu Na’Inna Dambatta, said.

When issued, the notes will be admitted alongside the Original Notes to the official list of the UK Listing Authority and will trade on the London Stock Exchange’s regulated market.

Nigeria may apply for the notes to be eligible for trading or listed on the Nigerian Stock Exchange and Financial Markets Dealers Quotations Over-the-Counter Securities Exchange.

Pricing of the notes, the statement added, comes shortly after the country unveiled its National Economic Recovery and Growth Plan (NERGP) 2017-2020 on March 7.

The plan focuses on policy objectives in five core areas: macroeconomic policy, economic diversification and growth drivers, competitiveness, social inclusion and jobs, and governance and other enablers.

Key targets under the NERGP include reaching single-digit inflation, further growth in the agricultural sector, reducing unemployment, increasing operational energy capacity and domestic refining capacity, improving transportation infrastructure, and stabilising the exchange rate, with an emphasis on implementation, monitoring and evaluation of these economic goals.

Commenting after the successful pricing, the Minister of Finance, Mrs. Kemi Adeosun, said: “The proceeds from this additional note issuance will go towards funding capital projects in the 2016 budget.

“Infrastructure spending is at the heart of our National Economic Recovery and Growth Plan, which was released earlier this month and guides how we will deliver the urgent reform our economy needs between now and 2020.
“Resetting the Nigerian economy is essential in order for us to deliver sustainable long term growth.”

The Director General, Debt Management Office (DMO), Dr. Abraham Nwankwo, said: “Following the success of our $1 billion note issuance in February, Nigeria is delighted to have increased our 2017 Eurobond programme to $1.5 billion and to have secured the additional $500 million.

“Nigeria was keen to take advantage of favourable market conditions and investors’ appetite for Nigerian debt to complete our foreign borrowing programme for the 2016 budget and deliver further funds for vital capital projects.”

Citi and Standard Chartered acted as Joint Lead Managers and Stanbic IBTC as Financial Advisers on this issue.

Also, the finance ministry announced that the Central Bank of Nigeria (CBN) has approved a licence for a wholesale Development Finance Institution (DFI) with national authorisation to the Development Bank of Nigeria (DBN) Plc.
Adeosun confirmed the issuance of the licence, a statement from the ministry said on Wednesday.

According to the statement, the approval was conveyed in a letter addressed to the Managing Director/Chief Executive of Officer of DBN dated March 28, 2017.

The letter was signed by the Deputy Governor of the CBN in charge of Financial System Stability.

The approval was subject to meeting the minimum capital requirement of N100 billion, the reconstitution of the board of the bank and a review of its organogram.

The DBN was conceived in 2014, however its take off has been fraught with delays.

The Muhammadu Buhari administration inherited the project, but was determined to resolve all outstanding issues and set a target of 2017 for its take-off.

The finance minister had said previously that the DBN would have access to $1.3 billion which will be jointly provided by the World Bank (WB), KfW (German Development Bank), the African Development Bank (AfDB) and the Agence Française de Development (French Development Agency).

The bank is also expected to finalise agreements with the European Investment Bank (EIB).

She also stated that the DBN would provide loans to all sectors of the economy including manufacturing, services and other industries not currently served by existing development banks, thereby filling an important gap in the provision of finance to micro, small and medium enterprises (MSMEs).

As a wholesale bank, the DBN will lend wholesale to microfinance banks, which will on-lend to medium to long-term loans to MSMEs.

MSMEs contribute about 48.47 per cent to Nigeria’s Gross Domestic Products (GDP), but have access to only about 5 per cent of lending from Deposit Money Banks (DMBs).

The federal government expects that the influx of additional capital from the DBN will lower borrowing rates while the longer tenure of the loans will provide the required flexibility in the management of cash flows, giving businesses the opportunity to make capital improvements and acquire equipment and supplies.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Continue Reading
Comments

Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

Published

on

Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

Continue Reading

Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

Published

on

Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

Continue Reading

Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

Published

on

Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending