Nigeria Raises $2.2billion in Spectacular Eurobond Debut.

Nigeria has made a notable return to the international capital markets after more than two years of absence, launching a $2.2 billion Eurobond issue to secure funding that addresses its fiscal deficit. 

Why does this matter: This move aligns with a trend in several other African countries, including Ivory Coast, Kenya, Benin, Cameroon, and South Africa, which have successfully re-entered the international markets due to improved market conditions and a potential decline in interest rates. 

In Nigeria's case, an ambitious economic reform agenda—featuring the removal of fuel subsidies and adjustments to the exchange rate—has energised its fundraising efforts. This includes the nation’s first domestic issuance of dollar-denominated bonds, which raised $900 million and was oversubscribed by 180% as local investors seized the opportunity. The five-year notes carry a coupon rate of 9.75%, with a yield of approximately 9.67%. 

The bond issuance consisted of two distinct maturities: one maturing in 2031 (a 6.5-year bond) and another maturing in 2034 (a 10-year bond). Prominent financial institutions managed the transaction, including Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., and Standard Chartered Plc. Notably, the proceeds from this bond issuance are allocated as follows: $700 million is designated for the 2031 maturity, while $1.5 billion is earmarked for the 2034 maturity. It was also attractively priced, with coupon and re-offer yields set at 9.625% for the 6.5-year note and 10.375% for the 10-year note.

Demand for Africa's sovereign offerings remains strong. The peak order book for the $2.2 billion Eurobond issuance exceeded $9 billion, attracting favourable responses from diverse global investors. This group includes fund managers, insurance and pension funds, hedge funds, banks from the United Kingdom, North America, Europe, Asia, and the Middle East, as well as Nigerian investors.