Nigeria raises $2.2 billion in Eurobond auction

Nigeria has successfully raised $2.2 billion through its recent Eurobond auction, a significant milestone in its ongoing efforts to rectify its escalating fiscal deficit.

The government is targeting the raised cash to augment the 2024 budget, which is under strain due to persistent revenue shortfalls and mounting public spending.

Nigeria recorded a total subscription of $8.8 billion, but only $2.2 billion was allotted.

The breakdown shows that the allotments are $700 million for the 6.5-year bond priced at 9.625 per cent and a larger $1.5 billion for the 10-year bond priced at 10.375 per cent.

The government floated the bonds under the Regulation S/144A structure, making them available to both U.S. and international investors.

While the oversubscription indicates growing confidence of investors in Nigeria’s economy’s capacity to sustain the rising debts, there is cautious optimism as evidence shows that Nigeria’s economy may be moving closer to attaining ‘junk status’ with its 10-year bond priced significantly higher than typical investment-grade bonds.

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According to the government, the bonds are scheduled to be listed on the London Stock Exchange’s main market with the transaction likely to settle on December 9, 2024.

The government stated that denominations will start at $200,000 with multiples of $1,000 afterwards.