Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.


Nigeria's Eurobonds four times oversubscribed

03 July 2013, 07:57

Johannesburg - Nigeria comfortably raised $1 billion in its return to the Eurobond market on Tuesday, taking advantage of a window of relative calm in the markets to issue both a long and shorter-dated bond.

The issue was four times oversubscribed, with just over $4 billion in bids, a source told Reuters - underscoring still buoyant investor appetite for scarce frontier African paper despite a recent sell-off in emerging market assets.

Nigeria issued a $500 million 5-year bond at a yield of 5.375 percent and a $500 million 10-year bond with a yield of 6.625 percent, according to IFR, a Thomson Reuters news and analysis service.

The 5-year paper received bids of $1.77 billion and the 10-year of $2.26 billion, the source said.

By comparison, Nigeria's debut $500 million 10-year Eurobond, which it issued in 2011, received bids worth two and a half times the amount on offer.

The yield on the new 10-year bond is less than the 7 percent Nigeria paid in 2011, but still higher than what it could have paid if it had issued just a few months ago, analysts said.

The 2021 bond was trading at a yield of 5.92 percent on Tuesday but was as low as 3.66 percent at the start of the year.

A rise in U.S. Treasury yields since late April and comments by U.S. Federal Reserve chairman Ben Bernanke about tapering its bond-buying programme have pushed up yields on African Eurobonds by up to 300 basis points in some cases.

Open Window

Most Eurobonds rallied this week. Nigeria decided to take advantage of the improved conditions ahead of the release of U.S. non-farm payrolls on Friday, said Nicholas Samara, vice president in capital markets origination at Citi, one of the lead managers along with Deutsche Bank.

Strong non-farm payrolls could heighten fears of an end to the Fed's quantitative easing.

Wednesday was also a no-go, he added, as it will be a busy trading day ahead of the July 4 holiday in the U.S.

"It's an opportunistic trade today that Nigeria, alongside other issuers, have done," Samara said. "Today was an open window. Come Friday, if you have strong non-farm payrolls the next opportunity possibly could be September."

Nigeria's domestic debt was about 18 percent of GDP in 2012 and external debt was 2.5 percent of GDP, lower than its peers.

Inflation is in single digits and investors are optimistic about power sector reforms, seen as key to unlocking further growth potential in the Nigerian economy.

Samir Gadio, emerging markets strategist at Standard Bank, said the rally in emerging market Eurobonds in the past few days could have enough momentum to see yields fall further on secondary markets in the short run.

"That said, the government will still have to pay a higher external funding cost than what it could have secured a couple of months ago," he said.

- Reuters


Read News24’s Comments Policy

Comment on this story
Comments have been closed for this article.

Read more from our Users

Nigeria @ 56: Words to my green f...

A leader’s job is not to dictate, but rather to be respected, admired and be a trustee, of the land we love, with so much potential, a land which should be freer than free. Its still a long way to fufilling our destiny! Read more...

Submitted by
Isaac Asabor263
Recession: An opportunity for Nig...

The recession should be seen as an opportunity for the country’s promotion as long as we all collectively conduct ourselves in a patriotic manner, writes Isaac Asabor.  Read more...

Submitted by
Black and White

We want to imitate the whites in everything because we are ignorant of our inherent originality and content. We spend all our Naira to acquire his inventions because we so oblivious of our natural endowments that we allow him have it for free. Read more...

Submitted by
Nate Nat
Adamawa State University Mubi: A ...

ADSU integrity forum has accused the Sunday Joshua Wugira, a lawyer, of adopting unorthodox tactics by abusing his privilege by attacking the integrity of ADSU Vice Chancellor Dr. Moses Zira Zaruwa, writes a News24 reader. Read more...

Submitted by
Abdulsalam Jubril
My Country Nigeria (Part One)

Poetry by Abdulsalam Jubril.

Submitted by
Abdulsalam Jubril
Recession, dearth in leadership a...

Every leader has the opportunity to become great and making himself immortal in the lives and hearts of people for generations to come. Will Mr. President seize this opportunity?, questions Abdulsalam Jubril. Read more...