Lagos, Aug. 16, 2024 – The Federal Government is to raise $500 million from the local bonds market from Monday.
It is the first dollar-denominated bond that will be floated in the country.
Its proceeds are to be used to finance infrastructure development, stimulate economic growth and enhance foreign currency reserves.
Wale Edun, the Minister of Finance, who spoke during its road show on Thursday, said: “This bond issuance is more than just a financial instrument; it is a strategic move to channel funds into sectors that will catalyse economic growth.
“We aim to mobilise resources effectively and channel them into the country’s development needs. This initiative aligns with our broader strategy to utilise both domestic and foreign capital for infrastructure and other critical sectors.”
“This historic issuance will provide essential foreign exchange liquidity and boost reserves, which will help stabilise the exchange rate, manage inflation, and eventually lower interest rates.
“It will also lay the foundation for increased investment by both domestic and foreign direct investors.
“We already experience a significant influx of foreign portfolio investments, and this will further enhance it.
“Regarding liquidity and risk management, the Nigerian economy currently generates about $55 billion in export revenues, which is expected to grow in both the oil and non-oil sectors.
“This growth will help manage liquidity and foreign exchange risks associated with raising and repaying these funds.
“Additionally, it introduces another avenue for foreign exchange financing, complementing the export sector and the Eurobond market.”
The Debt Management Office (DMO) said the bond would have a face value of $500 million and would be accessible to a broad range of investors.
The minimum investment amount is $10,000, with additional investments allowed in increments of $1,000. Its structure is intended to enable wider participation among investors both within Nigeria and the diaspora
Patience Oniha, the Chief Executive of DMO, said the settlement date for the bond would be 10 days after the auction date.
Gbadebo Adenrele, the Managing Director of Investment Banking, at United Capital Group, said: “One of the key aspects of this bond issuance is that it will be listed on platforms such as the Nigerian Exchange and FMDQ, making it accessible to a variety of investors.
“The principal will be repaid after five years, with interest payments made every six months. This structured repayment schedule is designed to provide confidence to investors.” (GBN)
