Reuters is reporting that Nigeria has asked Goldman Sachs and Stanbic IBTC to advise it on the sale of a debut “diaspora bond”. This was based on information obtained from Stanbic IBTC. The diaspora bond is targeted at Nigerians living abroad.
Nigeria plans to raise between $100 million to $300 million. The idea to raise the bond was first conceived by the GEJ administration. Goldman Sachs and Stanbic were due to manage the sale at the time, but the government then “did not appoint any bookrunners before an election in 2015 that brought President Muhammadu Buhari to power” Reuters reports.
A finance ministry source told Reuters this month that the country will look to issue a diaspora bond after completing a $1 billion eurobond sale.
The Nigerian government believes diaspora bonds could be of interest to Nigerians living abroad and looking to invest in their home country. Countries such as India and Israel have used Diaspora bonds to attract cheap credit into their economy. Nigeria could attract rates as low as 7-9% % per annum which will be higher than was most Nigerians will get if they invest in similar securities abroad.
However, skepticism towards the CBN’s forex policy may prove a hard sell for some Nigerians living abroad especially as they worry about forex restrictions and scarcity when they intend to repatriate their money.