Nigeria raised $2.25 billion in a bond sale on Wednesday as markets largely shrugged off threats from U.S. President Donald Trump of potential military action in the country.
The Eurobond issued yesterday was oversubscribed four times, signalling deep investor confidence despite lingering geopolitical tension from Trump’s threat.
The dual-tranche offering, designed to raise external capital and diversify the nation’s funding sources, attracted over $9.1 billion, resulting in an oversubscription rate exceeding 400 percent. This demand allowed the Debt Management Office (DMO) to successfully price both the 10-year and 20-year tranches.
The 10-Year tranche saw seven times the demand, leading to an oversubscription of $4.9 billion (for an issued amount of $700 million), while the 20-year tranche saw its demand exceed $4.2 billion (for an issued amount of $1.5 billion).
The oversubscription is particularly notable as it came amidst a period of heightened market jitters stemming from U.S. political developments, specifically the implied threat by President Donald Trump of military action in the country if its government doesn’t halt the killings of Christians by Islamist militants.
The sale reflects a sharp improvement in global borrowing conditions that is tempting some of the world’s riskiest sovereigns back to international bond markets, with Congo Republic, Angola and Kenya also selling their high-yield debt to eager investors.
Nigeria’s dual-tranche listing for ten-year and twenty-year bonds was oversubscribed, and priced at 8.625 per cent and 9.125 per cent, respectively, according to IRF, below the initial price expectations.
The firm demand came despite Trump’s Sunday threat of military action in Nigeria if the country did not crack down on the killing of Christians. Instead, investors are keen to place their cash in frontier countries like Nigeria that have spent years making painful fiscal reforms; President Bola Tinubu removed fuel subsidies and allowed the naira to devalue – moves that experts say were necessary but that have made life tougher for citizens.
JPMorgan data also showed that only four emerging market countries still have bond spreads above 1,000 basis points over U.S. Treasuries – the threshold that is considered prohibitively costly. The spread compression has lured frontier borrowers back to the market.
