Nigeria recorded a successful $2.5 billion Eurobonds offer last week recording an over subscription of 432% and 472% for the February 23, 2030 and February 23, 2038 $1.25 billion offer respectively.
The offer once again confirmed investor appetite for Nigerian Eurobonds, a sign that the country’s economic trajectory is perceived as positive by foreign investors.
The Debt Management Office has released details of the offer subscription showing which set investors bought Nigeria’s Eurobond and which country they came from.
12 Year Offer
Offer Type:This is the offer with a maturity date of February 23, 2038.
Yield :7.143% is what the Nigerian Government will pay investors
Which country bought the most bonds?The United States bought 55% of the bonds, followed by the United Kingdom with 32%. Europe got 11% while the others got 2%.
Which investors got the most bonds?Asset Managers got 81%, while hedge funds got 13%.
20 Year Offer
Offer Type:This is the offer with a maturity date of February 23, 2030.
Yield :7.696% is what the Nigerian Government will pay investors
Which country bought the most bonds?The United States bought 59% of the bonds, followed by the United Kingdom with 28%. Europe got 12% while the others got 1%.
Which investors got the most bonds?Asset Managers got 81%, while hedge funds got 14%.
What this means?
This is a big deal considering that Nigeria was yanked off the JP Morgan Bond Index two years ago, amidst the forex crisis. It is also a big deal that the United States and the United Kingdom, two of the biggest financial markets in the world dominated as the country that subscribed the most. It is also important to note that the fact that Asset Managers dominated the subscriptions, more than Hedge funds, also indicates that investors see Nigerian bonds as safe, while hedge funds also consider the yields attractive.
There are downside risks, especially with foreign investors from the US and UK dominating the subscriptions. Reliance on the US and UK for our subscription is a concentration risk for Nigeria. There is a bit more comfort if we have a diverse pool of investors buying our Eurobonds. Also important to note that subscription from African countries was probably insignificant or non-existent.
Download the circular below;