The Federal Government has redeemed the $500 million Eurobonds issued to investors in 2011 today, Thursday 28, 2021.
The dollar-denominated bond which matures today will be paid at 6.75 percent, stated the Debt Management Office (DMO). The DMO said the funds for the repayment have been made available to the government.
Experts have attributed Nigeria’s inability to build infrastructure and embark on aggressive developmental projects on the rising cost of servicing debt and poor revenue generation.
The International Monetary Fund (IMF) and World Bank had compelled the Federal Government to raise Value Added Tax (VAT) by 50 percent from 5 percent to 7.5 percent and remove fuel subsidy in a move to up Nigeria’s revenue and reduce costs.
Still, Nigeria’s over-reliance on crude oil and lack of developed industries remains a hindrance to enhancing economic productivity, especially at a period when crude oil is expected to remain between $55 and $60 due to COVID-19 and slow global growth.
The minister of finance, budget and national planning, Zainab Ahmed, said the Federal Government will issue another Eurobonds this year to fund the deficit of the N13.6 trillion appropriation bill for 2021.
Until the economy is properly diversified, Nigeria will continue to rely on loans to fund the budget.
FG To Auction Three Bonds Worth 50B Each This Week
The Debt Management Office has said that the Nigerian government will offer N150 billion bonds for subscription in June.
The bonds comprised three bonds worth N50bn each, a circular said Friday.
The DMO said the bonds will be auctioned on June 23 and all three have the same date for settlement.
The bonds are a 10-year re-opening bond to be offered at the rate of 16.2884 percent and to mature in March 2027; a 15- year re-opening bond to be offered at 12.5 percent with the maturity date of March 2035; and a 30-year re-opening bond to be offered at 12.98 percent and mature in March 2050.
FGN Bonds are “backed by the full faith and credit of the Federal Government of Nigeria”, the DMO said, adding that they are equally charged upon the general assets of Nigeria.
The debt office explained further that FGN bonds qualified as liquid assets for liquidity ratio calculation for banks.
For re-openings of previously issued bonds where the coupon is already set, the circular said successful bidders would pay a price corresponding to the yield to maturity bid that cleared the volume being auctioned, plus any accrued interests on the instrument.
Last month, the DMO offered similar bonds of N150bn bonds for a subscription which comprised three bonds worth N50bn each.
Dangote Cement Completes Issuance of N50 Billion Series 1 Fixed Rate Senior Unsecured Bonds
Dangote Cement, Africa’s largest cement producer, announced it has successfully issued N50 billion Series 1 Fixed Rate Senior Unsecured Bonds under the company’s new NGN300 billion Multi-Instrument Issuance Program.
The leading manufacturer disclosed in a statement signed by Edward Imoedemhe, Deputy Company Secretary, Dangote Cement Plc.
According to the statement, the bonds were issued on May 26 2021 at coupon rates of 11.25%, 12.50% and 13.50% for the 3, 5 and 7-year tranches respectively.
The statement read in part, “Despite market headwinds, the bond issuance was well received and recorded participation from a wide range of investors including domestic pension funds, asset managers, insurance companies and high net-worth investors.
“The proceeds of the bond issuance will be deployed for the company’s expansion projects, short-term debt refinancing and working capital requirements. Aside from this first issuance of a traditional bond under the new Multi-Instruments Programme, Dangote Cement has registered a programme enabling it to consider different types of fixed income instruments to cater for different type of investors.”
“The ability to issue Green Bonds and Sukuk will enable the company leverage the depth and breadth of the Nigerian market.”
Commenting on the bond issuance, Michel Puchercos, Chief Executive Officer of Dangote Cement Plc. stated: “This bond issuance allows us move a step further in achieving our expansion objectives and will be deployed to projects instrumental in supporting our export strategy while improving our cost competitiveness.
“We thank the investor community for their continued support in the management of Dangote Cement and their successful participation in the bond issuance.”
Absa Capital Markets Nigeria acted as Lead Issuing House for the Series 1 Bonds, and Stanbic IBTC Capital, Standard Chartered Capital & Advisory Nigeria Limited, United Capital Plc, FBN Quest Merchant Bank, FCMB Capital Markets, Coronation Merchant Bank, Ecobank Development Corporation Nigeria, Futureview Financial Services, Meristem Capital Limited, Rand Merchant Bank, Quantum Zenith Capital and Vetiva Capital Management acted as Joint Issuing Houses. The Bonds will be listed on the Nigerian Exchange Limited and FMDQ Securities Exchange.
African Development Bank Launches AUD$600 Million (USD$463.9 million) Kangaroo Social Bond
The African Development Bank launched a A$600 million (US$463.9 million) 5.5-year Kangaroo bond, marking its return to the Australian dollar bond market.
The transaction, announced on 8 June, was led by Nomura and RBC Capital Markets. It is the institution’s first benchmark Kangaroo since early 2018 and its first in the mid-curve since 2015. It is also the largest AUD trade ever issued by the Bank. More than 30 investors participated in the deal, with a total order book of more than A$775 million, leading to an upsize of the trade from the announced size of A$250-300 million to the final size of A$600 million. These included a strong cohort of Australian investors, while fund managers were the major investor type.
African Development Bank Treasurer Hassatou N’sele said the Covid-19 pandemic had led to a rise in global issuances of social bonds.
“Following on from the ground breaking USD$3.1 bln 3 year ‘Fight Covid-19’ Social Bond we issued in 2020, we’re glad to see that public domestic markets, like the Kangaroo bond market, are now seeing similar development in terms of interest from dedicated ESG investors, which provided additional momentum enabling us to print the largest trade we’ve ever done in AUD”.
The African Development Bank’s social bonds have use of proceeds allocated to projects that alleviate or mitigate social issues such as improving access to electricity, water and sanitation, and improving livelihoods through flood-risk reduction and access to clean transportation and employment generation.
Recent KangaNews data show that the African Development Bank had A$1.75 billion of bonds mature between its 2015 benchmark deal and its most recent. Keith Werner, Manager of Capital Markets and Financial Operations, said 38 per cent of investors in the deal had a socially responsible investment approach and that the African Development Bank intends to issue more social bonds in Australian dollars.
“In addition to the important contribution that socially responsible investors had to the success of this trade, it’s also gratifying to see such a large portion of the investors (41%) were domestic, which is an area where we haven’t seen strong support historically. We look forward to leveraging this momentum and continue evaluating opportunities in the future in this market”, Werner said.
The Australian dollar is the fifth currency in which the African Development Bank has issued social bonds since it established the program in 2017, following deals in euros, US dollars, Norwegian kroner and Swedish kronor.
In December 2016, the African Development Bank launched its inaugural Kangaroo Green Bond. This transaction followed successful outings in USD and SEK Benchmark formats.
A Kangaroo bond is a foreign bond issued in the Australian market by non-Australian firms and is denominated in Australian currency. The bond is subject to the securities regulations of Australia. A Kangaroo bond is also known as a “matilda bond.”
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