Nigeria to Raise US$2.3 bln from Eurobonds in Q4- Note
The Nigerian government plans a US$2.3 billion Eurobond issuance before year-end to support budgetary needs and undertake liability management operations, CSL Stockbrokers said in an update.
In November, the sovereign Eurobond worth US$1.1 billion is expected to expire, and this may require the government to borrow to settle its international obligation.
According to CSL, the planned issuance would mark Nigeria’s return to the international debt market following the successful US$2.2 billion Eurobond sale last December, which was nearly four times oversubscribed.
“This planned issuance aligns with our earlier view that Nigeria could return to the market before year-end to raise at least US$2 billion”, CSL Stockbrokers said.
In August, analysts at CSL Stockbrokers projected that US Fed Rate cut could spur fresh Eurobond issuance for Nigeria.
“In terms of structure, we maintain that the authorities are likely to opt for a 10-year amortising Eurobond, taking advantage of the yield gap between the 2034s and 2038s on the curve”, the firm said in commentary note.
On pricing, market conditions remain favourable, with yields across Nigeria’s Eurobond curve having declined by an average of 168 basis points year-to-date (YTD).
“We expect strong investor demand, supported by growing confidence in Nigeria’s economy following recent reform measures and by the global trend towards lower interest rates, which continues to boost appetite for emerging market assets”, the firm said.
It said in addition, reports indicate that plans are underway for a foreign Sukuk issuance valued at approximately US$500 million.
CSL added that the plan aligns with its analysts’ earlier view that Nigeria may accelerate the issuance of non-conventional instruments, such as green or sustainable bonds, in line with the growing trend among Sub-Saharan African (SSA) sovereigns seeking access to ESG-linked financing at relatively lower costs.
The investment expressed that such instruments typically attract dedicated pools of capital from global investors focused on sustainability and responsible investing, broadening Nigeria’s funding base while enhancing its ESG profile in the international debt market.
“We expect the planned issuances to strengthen external reserve accretion, which has been on an upward trend in recent months, with the 30-day moving average rising to US$42.6 billion as of 7 October.
“The anticipated inflows should also boost liquidity in the foreign exchange market, supporting both the stability and continued appreciation of the local currency.
“However, given that the proceeds will likely be used to finance fiscal operations, the borrowings could contribute to increased fiscal deficit pressures in the near term”, CSL stated. Lafarge Africa Delivers 80% Return on Investment in 9-Month
