Nigeria Merges US$500m Notes Into Existing N1.0bn At 7.5% Yield

Nigeria Merges US$500m Notes Into Existing N1.0bn At 7.5% Yield

The Federal Government of Nigeria says it is consolidating its US$500 million notes into a US$1.5 billion Global Medium Term Note programme to form a single series with the existing US$1,000,000,000 Notes due in 2032.

The Federal Republic of Nigeria, on Wednesday, March 29, 2017, said it has priced its offering of US$500 million aggregate principal amount of notes at a yield of 7.5% under its US$1.5 billion (up from US$1 billion) Global Medium Term Note Programme.

The notes would now be consolidated to form a single series with the existing US$1,000,000,000 at 7.875% Notes due in 2032, which was issued on February 16, 2017.

The terms and conditions of the Notes will be identical to those of the Original Notes, paying a coupon of 7.875% per annum, maturing on 16 February 2032 and repayable by way of bullet repayment of the principal together with the Original Notes, according a statement by Salisu Na’Inna Dambatta, Director (Information) in the Federal Ministry of Finance.

As with the Original Notes, the Federal Government plans to use proceeds of the Notes to fund capital expenditures in the 2016 budget.

The successful pricing at 37.5bps inside the original coupon rate, demonstrates continued strong market appetite for Nigerian securities, despite continued volatility in emerging and frontier markets and shows confidence by the international investment community in Nigeria’s economic reform agenda, the statement added.

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

The Federal Government may however 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 comes shortly after Nigeria launched its National Economic Recovery and Growth Plan 2017-2020 on 7 March 2017. 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 of 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 on the successful pricing, 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.”

Also commenting on the Notes’ pricing, Director General of the Debt Management Office (DMO), Dr Abraham Nwankwo expressed the government’s delight at the opportunity “to have increased our 2017 Eurobond programme to US$1.5 billion and to have secured the additional US$500 million. Nigeria was keen to take advantage of favorable market conditions and investor 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.