Nigeria’s financial markets celebrated a historic milestone as the country’s maiden foreign-currency domestic bond achieved an overwhelming subscription of $900 million—far exceeding the initial offer size of $500 million.
Analysts say the oversubscription highlights strong investor confidence in Nigeria’s economic future.
The Federal Government’s landmark sovereign bond, which attracted a diverse group of investors, was described as a resounding success by the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun. Speaking on the results of the issuance, Edun said that the oversubscription demonstrated faith in Nigeria’s economic trajectory, despite the current challenges facing the nation.
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“The oversubscription of this $500 million offer underscores continued investor confidence in Nigeria’s economic stability and growth potential,” Edun noted.
He pointed out that the bond issuance aligns with the government’s efforts to deepen economic growth and promote financial inclusion, critical components of President Bola Ahmed Tinubu’s administration’s economic agenda.
The Minister further explained that this debut foreign-currency domestic bond sets a new benchmark in Nigeria’s financial markets. The success of the bond, issued under the authority of Presidential Executive Order No. 16 of 2023, is seen as a critical step toward diversifying Nigeria’s funding sources and strengthening the country’s financial resilience.
“The issuance of this inaugural domestic FGN US Dollar Bond demonstrates that investors, both Nigerians and foreigners residing in the country, as well as the diaspora, continue to have faith in the country’s economy,” Edun remarked.
He also confirmed that the proceeds from the bond will be directed toward key economic sectors, as approved by the President, aiming to address the most pressing needs of the country.
The bond attracted a wide array of participants, from local Nigerians to non-residents and institutional investors, reflecting a broad base of confidence in the nation’s economic strategy. The bond’s five-year tenor, with a coupon rate of 9.75%, was especially attractive to investors seeking stable returns in a volatile global market.
“The success of this bond not only speaks to the sophistication of the Nigerian capital markets but also to the growing confidence in Nigeria’s ability to manage its debt and finances in a sustainable manner,” Edun said.
The participation includes Nigerians in the diaspora, an indication of a growing appetite for investment in the country’s financial markets, even amidst economic challenges.
Boosting Capital Markets
The Series I $500 million Domestic FGN US Dollar Bond is part of a broader $2 billion bond program registered with the Securities and Exchange Commission (SEC), offering the government the flexibility to absorb oversubscriptions up to the total size of the program. This marks an essential step in expanding Nigeria’s capital markets, offering new opportunities for both the government and private entities to raise capital.
The forthcoming listing of the bond on the Nigerian Exchange (NGX) and the FMDQ Securities Exchange is expected to further bolster Nigeria’s capital markets. Edun highlighted that this move will enhance liquidity and deepen the domestic bond market, making it easier for future issuances by both the government and the private sector.
“By listing this bond, we are positioning Nigeria as a key player in global capital markets, while promoting greater financial inclusion at home,” Edun remarked, adding that the government’s proactive approach to diversifying funding sources will be critical to maintaining economic growth.
Debt Management Office Praises Historic Issuance
Director General of the Debt Management Office (DMO), Ms. Patience Oniha, also hailed the success of the bond issuance as a key milestone in Nigeria’s economic journey.
“This is a pivotal step in Nigeria’s economic development,” Oniha stated, noting that the overwhelming $900 million subscription from diverse investors underscores the depth and maturity of Nigeria’s fixed-income securities market.
Oniha explained that the DMO worked diligently with institutional partners and advisers to ensure the success of the bond issue. She attributed the achievement to the expertise and guidance provided by financial advisers throughout the process.
“We are very pleased with the outcome of the capital raising, which speaks volumes about the confidence investors have in Nigeria’s economy,” she said.
The bond’s structure, which allows the government to absorb oversubscriptions up to the program’s $2 billion ceiling, positions Nigeria favorably for future capital-raising efforts. Oniha reaffirmed the government’s commitment to engaging investors and stakeholders in driving economic growth and development.
“We appreciate the continued support of the Nigerian public and our institutional partners who contributed to the successful completion of this historic issuance,” Oniha added.
A New Benchmark for Capital Raising
The maiden sovereign bond, with its oversubscription and strong demand, has set a new benchmark for future capital-raising initiatives, both for the government and private sector players. Market analysts predict that the success of this issuance could pave the way for further bond issuances by other tiers of government and companies, providing them with a reliable mechanism to raise much-needed capital.
Market insiders echoed this sentiment, suggesting that the bond’s success will stimulate other local governments and corporations to tap into the capital markets. With the bond acting as a benchmark, it is expected to open new doors for more extensive and efficient capital raising in Nigeria’s domestic financial market.