$1bn Eurobond to develop domestic bond market —DMO

The Debt Management Office (DMO) has said it listed the $1 billion Eurobond of the Federal government of Nigeria on the Nigerian Stock Exchange is to foster inclusiveness and further develop the domestic bond market.

Specifically, 1 million units of FGN Eurobonds was listed at a par value of $1,000 per unit, to mark the first listing of a sovereign dollar denominated instrument in the Nigerian Capital Market on Thursday.

The Director General of the DMO, Dr Abraham Nwankwo said the listing was part of DMO’s commitment to democratise its activities and benefits.

Speaking at the facts behind the listing in Lagos on Thursday, Nwankwo said, “We want Nigerians to have access to trading of the Eurobond, we want to create access, choice and inclusiveness.”

The Tenor of the bond which is for 15 years, due in 2032 is to ensure an effective borrowing system that will provide a longer period to successfully utilize the resources gathered for the development of the economy and pull it out of its recessive state, the DG explained.

Dr Nwankwo also noted that the Eurobond, issued by the Federal Government of Nigeria, is for the purpose of raising money to fund the capital projects in the 2017 budget such as Roads, Railway, power projects amongst others.

While presenting the Facts behind the Listing, Mr Monday Usaide, Head, Market Development Department, Debt Management Office (DMO) said the coupon rate of the bond is set at 7.875 per cent per annum and payable on semi-annual basis.

Usaide said the distribution of the bond showed asset managers had the highest at 73 per cent, hedge fund was next with 13 per cent, Insurance/pension at 10 per cent, banks/private banks three per cent while others stood at 1 percent.

Geographical distribution of the bond had the US and UK with 48 and 37 per cent respectively, Europe at 10 per cent while others had five per cent

Earlier in his opening remarks, Mr Ade Bajomo, the NSE ED, Market Operations and Technology, had noted that the listing was a testament of the Federal Government’s and DMO’s commitment to the growth and enhancing the depth of the Nigerian Capital Market.

He observed that the country’s infrastructural gaps had been identified as “probably the core constraint limiting the realisation of our economic potential,” noting that the Federal Government has also underpinned its focus on developing the nation’s capital stock as a panacea for driving economic growth and development.

“Critical to the achievement and sustainability of our growth and developmental objectives is a well-functioning and efficient capital market; enabling aggregation of, and access to, long term capital to support business and developmental needs,” he said.

Eurobond, as a FX denominated instrument, Bajomo noted, would trade and settle in its currency of issuance (USD); thus setting the foundation for multicurrency capital raising and trading in the domestic market, which would subsequently open up hybrid capital raising options and create additional portfolio diversification opportunities for investors.