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Friday, February 16, 2018 /08:55 AM / DMO
Successful
issuance would help further reduce the cost of government borrowing, while
maintaining Nigeria’s net debt levels
The
Federal Republic of Nigeria (the “Republic”) today announces that it has priced
its offering of US$2.5 billion aggregate principal amount of dual series notes
(the “Notes”) under its Global Medium Term Note Programme. The Notes comprise a
US$1.25 billion 12-year series and a US$1.25 billion 20-year series. The
12-year series will bear interest at a rate of 7.143%, while the 20-year series
will bear interest at a rate of 7.696%, and, in each case, will be repayable
with a bullet repayment of the principal on maturity.
The
offering is expected to close on or about 23 February 2018, subject to the
satisfaction of various customary closing conditions. The Republic intends to
use the proceeds of the Notes for the refinancing of domestic debt. The Notes
represent the Republic’s fifth Eurobond issuance, following issuances in 2011,
2013 and two in 2017.
The
offering has attracted significant interest from leading global institutional
investors with a peak order book of over US$11.5 billion. When issued, the
Notes will be admitted to the official list of the UK Listing Authority and
available to trade on the London Stock Exchange’s regulated market. The
Republic may apply for the Notes to be eligible for trading and listed on the
Nigerian FMDQ OTC Securities Exchange and the Nigerian Stock Exchange.
The
pricing was determined following a series of short meetings and conference
calls with investors. Commenting following the successful pricing, the
Honourable Minister of Finance Mrs Kemi Adeosun said: “Nigeria is focused on
reducing the cost of our debt portfolio and ensuring we have the optimal mix
between domestic and international debt.
The
proceeds of the issuance, which would supplement the issuances we completed in
2017, will be used to re-finance domestic debt, which is high cost and short
term, with lower-cost international debt, with a longer tenure.
We
will have a range of Eurobonds in issue, encompassing 5 year, 10 year, 12 year,
15 year, 20 year and 30 year bonds, giving investors a full basket of options
to participate in.” Commenting on the Notes’ pricing, the DMO Director General,
Patience Oniha said: "With the successful pricing of our 5 th Eurobond,
Nigeria’s status as an Issuer of Eurobonds with a strong and diverse investor
base has been further consolidated.
This
time Nigeria has priced a new 12-year bond at a yield of 7.143% and a 20-year
bond at a yield of 7.696%, both of which are consistent in price with our
existing portfolio. I am particularly pleased that the issuance will enable us
to refinance a portion of our existing domestic debt portfolio, with external
debt at considerably lower cost, but also that the impact of the process has
already led to a reduction in the cost of domestic borrowing, and so a double benefit
for the cost of our broader debt portfolio. Lower domestic rates will also
benefit corporate borrowers.”
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