Retails Investors Key Target in Nigeria’s $500m US dollar Bond Offer
Nigeria government targets retails investors subscription in its $500 million US domestic US dollar bond offering, Debt Management Office (DMO) said in a note.
The sum offered to the investors is part of $2 billion domestic US dollar issuance program, the Nigerian debt agency said in an explanatory note.
The move reverses initial plan to issue Eurobond as part of efforts to close the gap in the government spending plan for 2024.
Details showed that the proceed from the domestic US dollar bonds to fund critical sectors in the Nigerian economy.
The offering that is currently available for subscriptions by locals, Nigerians in diaspora including foreign and institutional investors, according to DMO.
The 5-year US dollar denominated local bond bonds priced at 9.75% coupon rate will pay investors’ interest rate twice in 12 months, according to the offer documents reviewed by MarketForces Africa.
The agency explained that the lot size differentiate the domestic US dollar bond from Eurobond.
According to explanation of the agency, Eurobonds are issue at large lot size of $200,000 typically, whereas the domestic US dollar bonds have a lot size of $10,000 which makes it more accessible for retail investors.
The agency explained further that Eurobond are listed on Euroclear but the domestic US dollars bonds are listed on Nigerian Exchange and FMDQ platform.
The bonds attracts 9.75% coupon rate, according to an offer document which states that both interest rate and principal payment will be made in US dollar.
Analysts, and investment experts told MarketForces Africa that banks will key into the opportunity amidst issue around windfall tax on FX gains.
According to the DMO, the Central Bank of Nigeria has granted liquid asset status to the bond, making it eligible for inclusion in liquidity ratio calculation of deposit money banks.
Analysts said the issuance is better for the country than a visit to Eurobond market at the time rates are relatively high. US Federal Reserves has refused to cut fed fund rates despite slowdown in consumer price index. #Retails Investors Key Target in Nigeria’s $500m US dollar Bond Offer
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