Obanla Ridwan Olawale
Investors in Nigeria’s first foreign currency-denominated domestic bond will receive their allotments on Friday, following the closure of the $500 million bond offer. The Federal Government, along with its professional parties, concluded the proposal for the bond, which opened on August 19 and closed on August 30.
The bond, a five-year instrument with a 9.75% annual interest rate, will be formally issued on September 6, marking the settlement date. Interest accrual and the bond’s tenure will begin from this date. The bond will be listed on the Nigerian Exchange (NGX) and FMDQ Securities Exchange, with bi-annual interest payments made in U.S. dollars.
The Debt Management Office (DMO) is overseeing the issuance and is currently processing returns from receiving agents. Investors will have their bonds credited to their Central Securities Clearing System (CSCS) accounts. For those without an existing CSCS account, a non-trading account will be created, which can later be regularized by appointing a stockbroker.
The federal government has committed to repaying both the principal and interest in U.S. dollars, as outlined in the Trust Deed, which legally binds the government to this obligation. The bond, carrying Nigeria’s sovereign ratings, is also tax-exempt for pension funds and qualifies as a liquid asset by the Central Bank of Nigeria.
Market analysts expect the bond to be oversubscribed due to its attractive pricing, which aligns with the current yield of Nigeria’s Eurobonds of equivalent tenure. With a 9.75% interest rate, the bond is expected to attract significant foreign investment, especially considering the lower yields available in markets like the U.S., Germany, Japan, and the U.K.
