Nigeria has raised US$2.2 billion in its latest Eurobond auction, attracting over 300% in demand to finance its growing fiscal deficit, amid renewed investor confidence.
- The issuance, which originally targeted US$2.2 billion, was oversubscribed by 309%, attracting bids worth US$9 billion from diverse foreign jurisdictions.
- The notes were priced at a coupon and reoffer yield of 9.625% for the 6.5 year paper and 10.375% for the 10-year notes maturing in 2031 and 2034 respectively.
- The West African country made a return to the international capital markets for the first time since 2022, issuing two bonds to finance the 2024 fiscal deficit and support the government’s budgetary needs.
“The transaction attracted a peak orderbook of more than US$9.0 billion. This underscores the strong support for the transaction across geography and investor class,” Nigeria’s Debt Management office said in a statement.
The Nigerian government raised US$700 million in the shorter term paper, and US$1.5 billion in the longer dated maturity. The debt management office noted demand from a combination of Fund Managers, Insurance and Pension Funds, Hedge Funds, Banks and other Financial Institutions.
Nigeria’s changing fortunes?
Africa’s top oil producer has its credit ratings still under pressure, with a B- (Positive) from Fitch, B-(Stable) from S&P Global and Caa1(Positive) from Moody’s.
“This outcome underscores the growing confidence of investors and the resilience of the Nigeria credit, and evidence of our improved liquidity position and continued access to international markets to support the financing needs of the government,” Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN) said in the statement.
Nigeria’s budget currently faces a record deficit of 4.6 trillion Naira – 7.6% of the country’s GDP, driven by lower crude oil output and the underperforming revenue collection.
The CBN has been aggressive in its monetary stance, maintaining a hawkish stance to tame the skyrocketing inflation and the pressured exchange rate. The current administration, led by Bola Ahmed Tinubu, devalued the Naira and slashed gasoline subsidies aimed at spurring economic growth and buoying public finances.
