Nigeria’s ambitious drive to raise funds through its nationals abroad has fetched it a whopping $300 million realised through its first Diaspora Bond, which had been oversubscribed by 130 percent, demonstrating investors confidence in the economy.
At the same time, the achievement has given Nigeria the impetus to begin trading on the London Stock Exchange and has made history as the first country in sub-Saharan Africa to achieve such a feat.
With the feat, Nigeria formally begins its trading on the London Stock Exchange today, registering its presence on the LSE, one of the biggest financial markets in the world.
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The Director General of the Debt Management Office (DMO), Dr. Abraham Nwankwo, explained in a statement Monday that the diaspora bond, which was 130 percent subscribed, was targeted principally at Nigerians abroad, to provide them with the opportunity to contribute to national development.
According to Nwankwo, the bond was structured as a retail instrument to appeal to a wide range of investors and was offered through private banks and wealth managers, rather than institutional investors, which normally deal with large volume transactions.
He revealed that there was considerable interest from investors from all over the world, with the issue attracting initial orders of about 190 percent of the offered amount.
Final subscriptions were about 130 percent of the ffer at the final price for the transaction.
“The diaspora bond has opened a new source of financing for the Federal Government of Nigeria for funding projects for the development of the country.
“This new window further enhances funding liquidity and flexibility of the Nigerian economy, which are necessary characteristics as the country gathers momentum towards the attainment of advanced economy status,” he said.
Nigeria is the first African country to issue a bond targeted at retail investors in the United States, a market highly regulated by the United States Securities and Exchange Commission (U.S. SEC).
The only previous U.S. SEC registration for an African country was targeted at institutional investors.
The issuance of a bond registered by the U.S. SEC provides an opportunity to access a wide range of investors, Nwankwo explained.
With this development, Nigeria can now routinely access funds from private banks and wealth managers in the U.S. and European markets: this opportunity is not available to other developing countries that have only issued Eurobonds.
Reacting to the successful debt raising, the Minister of Finance, Mrs. Kemi Adeosun, said: “To have received the approval of the U.S. SEC was indicative that the highest level of transparency and accountability in the economic process has been attained.”
She explained that the bond should positively impact the country’s credit rating, transparency rating and financial market development index rating.
“The Diaspora Bond is the first bond issued by an African sovereign registered with both the U.S. SEC and the United Kingdom Listing Authority (UKLA) and targeted at retail investors,” she stressed.
With the successful issuance of the debut Diaspora Bond, Nigeria will establish a programme for raising funds from Nigerians and Friends of Nigeria in Diaspora, as an avenue for continued participation in the development of the economy.
Market experts also hailed the move by the country, pointing out that Nigeria was able to raise the sum under the very restricted U.S. retail market.
This, according to experts, opened new window for programmed sourcing of diaspora funds.
“Unlike the Eurobond which restricts you to only institutional investors, to be authorised by U.S. and European regulators to issue a retail product means you can now approach wealth managers and private banks. In short, you have no more real restrictions,” one analyst who preferred not to be named, explained.
The iInternationalJoint Lead Managers to the issue were Bank of America Merrill Lynch and the Standard Bank of South Africa Limited.
The Nigerian Joint Lead Managers were First Bank of Nigeria Limited and United Bank for Africa Plc.
Prior to its issuance, the presidential aide for foreign affairs and diaspora, Hon. Abike Dabiri-Erewa, had urged all Nigerians to take advantage of the first ever dDiasporaoffer by buying into the bond.
She said her office and Nigerians in the diaspora were excited about the offer, adding that it was a unique way of lubricating the interest of Nigerians abroad to participate in the development projects being carried out by the Muhammadu Buhari administration.
Preparatory to the debt issuance, Nwankwo had led the federal government delegation, comprising officials of the DMO, Ministry of Finance, Central Bank of Nigeria (CBN), and the Budget Office of the Federation on investor roadshows that took place in major cities of the world, including London, New York, Miami and Geneva.