Nigeria Concludes $500m Dollar Bond, Settlement Sets for September 6th

The Federal Government of Nigeria has successfully concluded its $500 million domestic dollar bond offering, with settlement scheduled for September 6, 2024.

The bond, which was open for subscription on August 19, 2024, carries an interest rate of 9.75 per cent per annum and is set to mature in 2029.

This bond issuance represents a key element in Nigeria’s financial strategy, providing investment opportunities for both domestic and international investors.

The bond is structured as a five-year investment, with interest payments made semi-annually, and is available in minimum units of $1,000, with an initial minimum subscription of $10,000. Subsequent investments can be made in multiples of $1,000.

Investors will receive their principal in full through a bullet repayment at the end of the five-year term. The bond is accessible to a broad spectrum of investors, including Nigerian residents, individuals with overseas savings, members of the Nigerian diaspora, and Qualified Institutional Investors. It qualifies as a security under the Trustee Investment Act, Pension Reform Act, and other relevant legal frameworks, making it eligible for investment by trustees and Pension Fund Administrators. It is also classified as a government security under the Company Income Tax Act (CITA) and the Personal Income Tax Act (PITA), offering tax exemptions for pension funds.

Listed on the Nigerian Exchange Limited and FMDQ OTC Securities Exchange Limited, the bond will benefit from enhanced liquidity and accessibility. United Capital Plc leads the issuance as the primary issuing house and coordinator, supported by Meristem Capital Limited, Stanbic IBTC Capital Limited, and Vetiva Advisory Services Limited.

Additional support comes from a network of primary dealer market makers and receiving banks, including Access Bank Plc, Citibank Nigeria Ltd., and Guaranty Trust Bank Ltd.

This bond offering is part of Nigeria’s ongoing efforts to bolster its foreign reserves, finance critical infrastructure projects, and address budgetary needs. Wale Edun, Minister of Finance and Coordinating Minister of the Economy, has highlighted the bond’s role in stabilising the country’s foreign exchange reserves.

Nigeria aims to double its initial offering amount, targeting $1 billion in subscriptions through this bond auction. The government has outlined specific identification requirements for prospective investors, including the need for a Bank Verification Number (BVN) and a National Identification Number (NIN) for all Nigerian citizens, including those residing abroad. All payments for the bond must be made through electronic transfers, as cash subscriptions are not permitted.