FG raises $900m from first domestic dollar-denominated bond

The Federal Government said it raised $900 million from Nigeria’s first-ever dollar-denominated domestic bond. This shows a 180 percent oversubscription.

The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, who disclosed this, noted that the oversubscription reflects investor confidence in Nigeria’s economic stability and potential for growth.

The $500 million domestic FGN US Dollar Bond, with a five-year maturity and a 9.75 percent coupon, is the first tranche of a $2 billion bond programme registered with the Securities and Exchange Commission.

The structure of the bond allows the government to absorb oversubscriptions up to the full $2 billion programme limit.

Edun, in a statement on Wednesday, explained that the successful issuance of the domestic dollar bond marks a significant step in the government’s efforts to deepen economic growth and promote financial inclusion.

He added that this achievement demonstrates the government’s commitment to diversifying funding sources amid economic challenges.

“The issuance of this inaugural domestic FGN US Dollar Bond highlights the continued faith investors have in Nigeria’s economy,” Edun said.

The bond attracted a wide range of investors, including Nigerians both locally and abroad, as well as institutional investors. The proceeds from the bond will be allocated to critical economic sectors, as approved by President Bola Ahmed Tinubu.

The Director-General of the Debt Management Office (DMO), Patience Oniha, described the bond’s success as a pivotal moment for Nigeria’s economic development.

She noted that the $900 million raised from diverse investors underscores the growing sophistication of Nigeria’s domestic fixed-income market.

Oniha praised the efforts of all parties involved in the bond issuance, crediting their expertise for the transaction’s success.

The DMO boss also expressed gratitude to all the parties involved in the transaction.

She praised all parties, including Africa Finance Corporation as Global Coordinator, United Capital Plc as Lead Issuing House/Coordinator, Meristem Capital Limited, Stanbic IBTC Capital Limited, and Vetiva Advisory Services Limited as issuing houses.

“Our legal partners, Olaniwun Ajayi LP and G. Elias, and financial advisers, Constant Capital Markets and Securities Limited and Iron Global Markets Limited, for their critical roles in structuring and executing the bond,” Oniha said.

“This transaction was made possible through the expertise and guidance of our advisers. We also appreciate the continued support of the Nigerian public and our institutional partners who contributed to the successful completion of this historic issuance.”

Speaking further, she said DMO was very pleased with the remarkable outcome of the exercise.

She added in particular that over $900 million, which represented an over 180 percent subscription when compared to the $500 million that was offered, as well as the diverse investors who subscribed to the bond, attested to the depth and increasing sophistication of the domestic fixed income securities market.

The DMO reaffirmed the Federal Government’s commitment to collaborating with investors and stakeholders to drive economic growth and development in the country.

A professor of capital Market, Uche Uwaleke of the Nasarawa State University, Keffi, had earlier noted that the issuance of the bond should help to strengthen the naira since the dollars raised will be available for intervention in the forex market.

He noted that a high demand for this debut bond will embolden the government to further explore the domestic dollar bonds market, which will reduce the federal government’s incursion into the naira bond market, thereby freeing up capital for the private sector.