Nigeria has returned to the eurobond market for the first time in over two years to address its fiscal deficit.
An analyst at Rand Merchant Bank expects Nigeria’s eurobond issuance to attract strong demand, likely due to the attractive yields and renewed investor interest in African markets, according to Bloomberg.
The country is issuing $500 million in 6.5-year bonds with a yield of about 10.125% and a benchmark-sized 10-year bond at 10.625%.
“It is very likely that they will be well subscribed given the limited supply of sovereign issues in Sub-Saharan Africa and due to Nigeria’s ongoing reforms,” said Samantha Singh-Jami, an Africa strategist at Rand Merchant Bank.
African nations were largely shut out of international capital markets in 2022 due to soaring global interest rates driven by inflation.
However, several countries, including Ivory Coast, South Africa, Benin, Senegal, Kenya, and Cameroon, have re-entered the market this year.
Nigeria, which last issued eurobonds in March 2022, recently raised $900 million through its first domestic dollar-denominated bond sale in September to support the 2023 budget.
Nigeria’s government has faced challenges in balancing public spending with revenue due to disruptions in crude oil production, weak tax collection, and limited economic diversification.
These issues have strained public finances.
To address a significant budget shortfall, the government announced plans last month to raise $2.2 billion from foreign investors.
