Nigeria holds investor meetings ahead of Eurobond issuance

Nigeria recently held virtual meetings with potential investors in preparation for a planned Eurobond issuance next month. This move comes as the Nigerian government aims to raise $6.2 billion for the financing of the 2021 budget. Tajudeen Ibrahim, Head of Research at Chapel Hill Denham, discussed the significance of this development with CNBC Africa. The decision to include local investors in the Eurobond issuance marks a significant shift in Nigeria's approach to financing. This move not only broadens the investor base but also sends a positive signal to the global investment community. Local investors, for the first time, have the opportunity to invest in a Nigerian Eurobond, which could yield substantial benefits for them, particularly if they hold US dollars. This shift is expected to attract long-term investors and businesses generating dollars. The outcome of the recent investor calls held by Nigerian officials and senior Had investors was positive. Investors were provided with guidance on the pricing of the bonds, with the seven-year bond priced around 6.5%, the 12-year bond at 7.75%, and the 30-year bond between 8.5% to 8.65%. The pricing was determined based on the current market conditions, with the rates aligning with similar Eurobonds issued by other African governments. The overall market conditions in Africa have been favorable for Eurobond issuances, with approximately $8 billion raised so far this year by various governments and corporations. Nigeria's pricing guidance falls in line with these trends, indicating a promising response from investors. The government remains optimistic about the level of interest from both local and foreign investors. Ibrahim expressed confidence in the government's ability to raise the targeted $6.2 billion, citing positive indicators and an improving security situation in the country. He noted that the government has the option to raise more funds if market conditions allow for it. With a potential oversubscription expected, Ibrahim highlighted the recovery in the economy this year compared to the previous year, signaling a positive outlook for the Eurobond issuance. In conclusion, Nigeria's decision to engage local investors in the Eurobond issuance reflects a strategic shift towards diversifying its investor base and fostering confidence in the country's economic prospects. The success of this initiative could pave the way for future collaborations between the government and local investors, promoting sustainable economic growth and stability. The upcoming Eurobond issuance will be a key milestone in Nigeria's journey towards achieving its budgetary and developmental goals.