₦airaland Forum

Nigerian government officials have successfully wrapped up sales of the country’s Eurobond, after a 4-city roadshow in the US and UK. Reports reaching Nairametrics suggest the $1 billion 15 year tenor Eurobond was oversubscribed by as much as 6 folds.

This is fantastic news for Finance Minister Kemi Adeosun who has had to deal with issues surrounding her competency having been compared with her predecessor Okonjo Iweala. It is also good news for the embattled CBN Governor, Godwin Emefiele who has had to fight off criticisms of his exchange rate policy, a potential headwind in the success of the road show. It was alleged that his absence in the road show was deliberate.

Although there was initial skepticism around the potential uses of the bond proceed, given the fact that the public haven’t yet seen a comprehensive Economic recovery plan and precise uses of the proceed, Investors however, piled up to have a slice of Nigeria’s debt.

This can be attributed to the fact that yields are very low globally, given the muted growth being experienced all over the world. Nigeria’s Eurobond is attractive given the fact that it offers a yield of more 8.125% in an environment than even offers negative rates.

Following the interest rate environment, Emerging market bonds have held their attractiveness for investors who are always on the look out for yields.

Demand for Nigeria’s Eurobond was as high as $7.9 billion of orders for a $1bn 15 year issue; showing that it was oversubscribed by at least $6.9 billion.

Given this high level of demand displayed by international investors, Analysts are of the opinion that Nigeria should have taken the opportunity to tap more funds from the global markets, stating that raising only $1 billion is inefficient.

However, given the riskiness of Nigerian debt in the light of adverse macro indices and uncertainty around the currency, the Eurobond was priced relatively higher at 7.875%.

Concerns still remain over the potential use of the proceeds, as it may be spent supporting recurrent expenditure, or supporting the Naira.

http://nairametrics.com/investors-oversubscribe-nigerias-1b-eurobond/#more-97027

unite4real:
Dem Say We Do Eurobond; Guy, wetin be Eurobond?


Personally, I think Nigeria should have borrowed more but the people in government know what the finances look like better than me. The interest on this bond will have to be paid back in dollars – these guys won’t collect naira. This means that a portion of whatever Nigeria makes from oil over the next 15 years will have to be set aside to repay this bond (and the previous ones). The more you borrow, the more you have to set aside. This is why you should only borrow this kind of money to invest in things like infrastructure that can unlock your economy and increase revenues. Anything else will make you an unfortunate person.


http://nairametrics.com/what-nigerias-succesdfil-1-billion-eurobond-sale-means-by-doubleeph/#more-97137

Hmmm......borrowing more is quite tempting, but I think they might have consider the country's fiscal needs before deciding that $1bn is just what they need. If not there is need for them to reevaluate the situation o! After all, who no go take more.