Nigeria has decided to postpone its planned Eurobond issuance for this year, choosing instead to launch its first-ever dollar bond in the domestic market.
The move is aimed at addressing the country’s budget deficit and stabilizing the naira, which has faced significant pressure in recent months.
Finance Minister Wale Edun announced the decision during an investor conference in Lagos on Thursday, revealing that the government will issue a five-year, $500 million bond on August 19. The bond will target both local investors and the substantial Nigerian diaspora.
Explaining the decision to delay the Eurobond, Edun cited unfavorable market conditions.
“Interest rates are coming down, but they are still elevated, and our access to those markets is very strongly affected by the way the rating agencies rate developing countries,” Edun said.
“The only answer to that is relying on your recourses to raise domestic funds.”
The global rise in interest rates in 2022, driven by increasing inflation, has made it difficult for African nations to access international capital markets. However, some countries, including Ivory Coast, Benin, Senegal, Kenya, and Cameroon, have managed to return to these markets this year.
Gbadebo Adenrele, Managing Director for Investment Banking at United Capital Plc, the lead arranger for Nigeria’s bond issuance, stated that the yield on the new bond will be priced similarly to the country’s 2029 Eurobonds. As of 3:25 p.m. in London, those bonds were quoted at a yield of 10.23%.
By shifting focus to the domestic market, Nigeria aims to secure necessary funding while reducing reliance on volatile international markets.
The success of this domestic bond issuance will be closely watched as the government navigates its fiscal challenges and works to support the naira.