The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has stated that the $500m domestic FGN US dollar bond will enhance external reserves and help stabilise the foreign exchange situation in the country.
Edun made this statement on Thursday in Lagos at the hybrid roadshow ahead of the offer’s tentative opening on Monday.
“We are here today to discuss dollar funding, which is critical for the exchange rate and essential for stabilising investment and the economy. The Central Bank has adopted the ‘willing buyer, willing seller’ model, which has proven efficient and has contributed to the influx of additional dollars.
“Specifically, the flow of dollars into the economy has improved through portfolio investors, foreign direct investors, and multilateral organisations that have supported the President’s macroeconomic policies. Today, we are playing a significant role in this process with the domestic issuance of US dollar bonds, aimed at increasing the flow of dollars into the economy.
“We are already seeing success with the combination of monetary and fiscal policies, which is attracting foreign portfolio investments (FPIs).
Additionally, foreign direct investments are starting to increase, particularly in the oil and gas sector. More foreign exchange leads to higher reserves and a stronger exchange rate, which can reduce inflation and, consequently, interest rates. This creates opportunities for borrowing, investing, increasing productivity, creating jobs, and reducing poverty,” he said.
He noted that Nigeria’s external reserves, as of August 12, stood at $36.62bn, according to data from the Central Bank of Nigeria.
Detailing the offering, Dr Gbadebo Adenrele, Managing Director of Investment Banking at United Capital, the lead issuing house, disclosed that the $500m domestic bond targets Nigerians, non-Nigerians residing in the country, and Nigerians in the diaspora.
The bond has a tenor of five years with a minimum investment of $10,000, which he said would enable broader participation.
Repayment will be made in US dollars, thus preserving value for investors.
The bond will be listed on the FMDQ and Nigerian Exchange Limited.