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.
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.