NSE admits Nigeria’s first FX denominated bonds

NSE admits Nigeria’s first FX denominated bonds

NSE admits Nigeria’s first FX denominated bonds

The Nigerian Stock Exchange (NSE) has announced the listing of $1 billion Federal Government (FGN) Eurobond which will be issued under the country’s newly established Global Medium Term Note programme on the floor of the Exchange today.

The 15-year domestic Sovereign Eurobond priced at par and at a coupon of 7.875 per cent per annum is the first foreign currency denominated security to be listed and traded in the Nigerian capital market.

The Director General, Debt Management Office (DMO), Abraham Nwankwo said the listing of domestic Sovereign Eurobond reinforces FGN’s commitment to deepen and grow the Nigerian capital market. Developing the domestic market can help bridge the infrastructure deficit constraining the nation’s economic growth.

Foreign Exchange (FX) denominated bonds are unsecured and include bonds denominated in Euros with annual coupons ranging from 7.25 per cent to 8.375 per cent and maturity dates ranging from 2013 to 2033.
Bonds denominated in British pounds with annual coupons ranging from 8.375 per cent to 8.875 per cent and maturity dates ranging from 2015 to 2023 are also included within foreign currency denominated bonds.

Nwankwo noted that the Eurobond, which was over-subscribed by 780 per cent, is part of FGN’s funding strategy for its 2016 capital expenditure and will be spent on key infrastructure projects, in line with its economic plan.

“This huge over-subscription rate underscores a buoyant investors’ appetite for building exposure to Nigeria and demonstrates international confidence in the economy’s long term prospects”.

The Executive Director, Market Operations and Technology, NSE, Ade Bajomo commended the DMO for listing the Eurobond in the nation’s bourse. He noted that the domestic listing would diversify its investors’ base by giving Nigerian institutional investors access to the bond.

Bajomo said the listing of the dollar denominated bond on the exchange would boost price discovery and liquidity in the local market as well as help attract reliable long term foreign currency denominated funds into the financial market.

“It will also set the foundation for raising and listing more foreign denominated securities in Nigeria which will open up additional capital raising options for issuers and portfolio diversification opportunities to investors”.

To enhance seamless trading and settlement of the Eurobond, Bajomo said the exchange, in collaboration with the Central Securities Clearing System (CSCS) developed and presented a framework depicting onshore and cross border trade and settlement process to issuers and transaction parties, in line with its robust market practices strategy.

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