Nigerian govt. raises over $900 million in landmark dollar bond

Nigeria has successfully launched its first domestic dollar-denominated bond, raising over $900 million. This dollar bond milestone signals a new chapter in the country’s financial strategy, aimed at boosting economic resilience and fostering long-term growth.

Led by the African Finance Corporation, the initiative garnered significant interest from both local and international investors, demonstrating confidence in President Tinubu’s economic policies and development plans. The success of this dollar bond sets a new precedent for other African nations, highlighting the potential of Africa’s financial markets on the global stage.

The Honourable Minister of Finance and Coordinating Minister of the Economy, Wale Edun has praised the outcome, stating, “I am particularly pleased that as Chair of the African Caucus, we have launched an initiative that not only strengthens Nigeria’s economic resilience but also expands the horizon for capital markets of African economies.”

The overwhelming response from investors reflects the growing interest in Nigeria’s economic opportunities and the broader investment potential of Africa. With this bond issuance, Nigeria is positioning itself as a leader in financial innovation, driving both national and regional growth through strategic economic measures.

The funds raised from this dollar bond will be directed toward critical infrastructure projects and development programs, further strengthening key sectors of Nigeria’s economy.

The African Finance Corporation (AFC) acted as Global Coordinator on the first-of-its-kind issuance for Nigeria’s capital market. The bond which was issued at par has a tenor of five years and carries an annual coupon of 9.75%. The issue closed with a 180% oversubscription, underscoring strong domestic investor confidence in Nigeria’s economic stability and growth potential, and the effectiveness of AFC’s strategic capital markets leadership.

As a domestic issue, the investor base comprised Nigerians and non-Nigerians resident in Nigeria, Nigerians in the Diaspora, and institutional investors. The bond will be listed and available for trading on the Nigerian Exchange Limited (“NGX”) and FMDQ Securities Exchange Limited (“FMDQ Exchange”).

In a statement Wednesday, the AFC said, “The successful issuance demonstrates AFC’s pivotal role in supporting the Nigerian government’s commitment to deepening domestic capital markets, promoting financial inclusion and diversifying funding sources. It marks the first issuance under the FGN’s Domestic US Dollar Bond Programme. Proceeds of the bond issue will be invested in critical sectors of the Nigerian economy approved by the President on the recommendation of the Minister of Finance, subject to appropriation by the National Assembly.

“This inaugural domestic US dollar bond issuance is a significant achievement for Nigeria and marks a new chapter in the development of the country’s capital markets,” said Banji Fehintola, Executive Director and Head of Financial Services, Africa Finance Corporation. “We are honoured to have played a leading role in this landmark transaction as the Global Coordinator, which aligns with AFC’s mission to develop domestic capital markets in Africa by providing innovative financing solutions that meet the continent’s unique needs and also leveraging our deep capital market expertise to serve and deliver value to our clients. This successful issuance not only showcases Nigeria’s economic potential but also reinforces the benefits of African nations looking inward to tap the deep pool of domestic capital on the continent and taking the lead in financing their own development.

“AFC has a solid track record in capital markets with a well-established diverse investor engagement program that included issuance of a US$1.16 Billion global syndicated loan earlier this year. The Corporation was recently bestowed with “The Most Innovative Bond” award at the EMEA Finance Achievement Awards for its pioneering JPY 75 billion Samurai Bond Guarantee to the Arab Republic of Egypt and the “Best Supranational Syndicated Loan” award for securing a US$625 million syndicated loan last year, welcoming new lenders from the Middle East and Asia.

“Alongside AFC’s role as Global Coordinator for the domestic bond issuance, United Capital Plc acted as Lead Issuing House/Coordinator; Meristem Capital Limited, Stanbic IBTC Capital Limited and Vetiva Advisory Services Limited acted as Issuing Houses; Constant Capital Markets & Securities Limited and Iron Global Markets Limited acted as Financial Advisers; Olaniwun Ajayi LP and G. Elias acted as Solicitors; and Greenwich Trustees Limited acted as Trustee.”

SOURCE: Nigerian Federal Ministry of Information and African Finance Corporation