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Nigeria has sold a $500m eurobond as it seeks to turnround its recession-hit economy with big increases in public spending on infrastructure.
The West African country successfully tapped bond markets for the second time in as many months, pricing its bond with a yield* of 7.5 per cent, the finance ministry said in a statement on Wednesday. It did not state whether the bond had been oversubscribed.
In February it issued a $1bn bond with a coupon of 7.875 per cent that was almost eight times over-subscribed. Like last month’s issuance, this paper has a 15-year tenure. Nigeria’s national assembly had approved the eurobond sale after the government raised the oversubscribed bond, Reuters reported on Wednesday.
“The successful pricing…demonstrates continued strong market appetite for Nigerian securities,” the finance ministry said in a statement.
The country’s economy contracted in 2016 for the first time in 25 years, a reflection of the impact of the sharp fall in global oil prices on the crude exports-dependent nation of 180m people.
The Muhammadu Buhari administration has drawn criticism from the local business community and foreign investors for a slow and faltering response to the economic crisis. Earlier this month the government released a plan for economic recovery that floated the possibility of a policy shift to allow a more market reflective exchange rate. But the lack of implementation of a market-determined exchange rate – promised by the central bank last June – has apparently not cut off investor interest entirely in the country’s debt.
Nigeria is also seeking funding to plug a deficit in its proposed 2017 budget of around $7.7bn from China and the World Bank. The International Monetary Fund is to issue a report later on Wednesday detailing its view on the government’s management of the country’s economy that will inform the view of lenders such as the World Bank about whether it will disburse a $1bn loan.
Citi, Standard Chartered and Stanbic IBTC arranged the bond sale.
*This post has been updated to note that the bond has been priced with a yield of 7.5 per cent.