Nigeria has successfully debuted its first domestic dollar-denominated bond, raising over $900 million in an effort to bolster economic resilience and support long-term growth. This significant milestone represents a new chapter in the country’s financial strategy.
Strong Investor Confidence
The bond issuance was led by the African Finance Corporation (AFC) and attracted considerable interest from both local and international investors. This strong demand reflects growing confidence in President Tinubu’s economic policies and development plans. The success of this dollar bond sets a precedent for other African nations, showcasing the potential of Africa’s financial markets on a global stage.
Government Officials’ Praise
Wale Edun, the Honourable Minister of Finance and Coordinating Minister of the Economy, expressed satisfaction with the outcome. He noted, “I am particularly pleased that as Chair of the African Caucus, we have launched an initiative that not only strengthens Nigeria’s economic resilience but also expands the horizon for capital markets of African economies.” The bond issuance illustrates the rising interest in Nigeria’s economic opportunities and Africa’s investment potential.
Targeted Use of Funds
The proceeds from the dollar bond will be allocated to critical infrastructure projects and development programs, further reinforcing key sectors of Nigeria’s economy.
Details of the Bond Issuance
The AFC acted as the Global Coordinator for this groundbreaking issuance. The bond, issued at par, has a five-year term and carries an annual coupon of 9.75%. It experienced a remarkable 180% oversubscription, highlighting robust domestic investor confidence in Nigeria’s economic stability and growth prospects.
The investor base encompasses both Nigerian residents and non-residents, including Nigerians in the Diaspora and institutional investors. It will be listed on the Nigerian Exchange Limited (NGX) and the FMDQ Securities Exchange Limited (FMDQ Exchange).
AFC’s Role and Vision
In a statement, the AFC emphasized that this successful issuance aligns with its mission to deepen domestic capital markets, promote financial inclusion, and diversify funding sources. It marks the first transaction under the Federal Government of Nigeria’s Domestic US Dollar Bond Programme. Proceeds will be invested in crucial sectors approved by the President, subject to National Assembly appropriation.
Banji Fehintola, Executive Director and Head of Financial Services at AFC, commented, “This inaugural domestic US dollar bond issuance is a significant achievement for Nigeria. We are honored to have played a leading role, which showcases Nigeria’s economic potential and emphasizes the importance of African nations utilizing their own domestic capital for development.”
Recognition of AFC’s Expertise
The AFC has a strong track record in capital markets, recently earning accolades for its innovative financing solutions and successful syndications. Alongside the AFC’s leadership, United Capital Plc acted as the Lead Issuing House/Coordinator, with several other firms supporting the issuance.
This strategic initiative underscores Nigeria’s commitment to financial innovation and its emergence as a leader in the African capital markets.
Source:Premium Times NG