Published On: Fri, Mar 24th, 2017

Positive response projected for Nigeria bond

LAGOS, NIGERIA - JULY 15:  A detail of some Nigerian Naira,(NGN) being counted  in an exchange office on July 15, 2008 in Lagos, Nigeria.  (Photo by Dan Kitwood/Getty Images)

LAGOS, NIGERIA – JULY 15: A detail of some Nigerian Naira,(NGN) being counted in an exchange office on July 15, 2008 in Lagos, Nigeria. (Photo by Dan Kitwood/Getty Images)

LAGOS, (CAJ News) – ANALYSTS are projecting an oversubscription of the bond Nigeria is anticipated to issue in the market to raise funds to resuscitate the economy.
This comes after the Senate has endorsed moves by authorities to tap the international markets for a US$500 million sovereign issuance.
Rand Merchant Bank sated that given the strong demand for the US$1 billion bond issued in early February, it was unsurprising that the authorities are seizing the opportunity to get relatively cheap funding.
In the previous issuance, the pricing guidance was at just over 8 percent but the bond cleared at 7,87 percent with an order book that secured a shade under US$8 billion.
“We estimate a similar degree of oversubscription given how thirsty foreign investors, particularly US-based hedge funds, are for yield,” RMB stated.
The market watcher however said while it continued to flag that the pricing of the bonds, both in the primary and secondary markets, is was “out of sync” with the macroeconomic risks, the relatively thin pipeline of issuances in Africa will play to Nigeria’s advantage.
Nigeria, Africa’s biggest economy and most populous country is experiencing a recession blamed on the declining demand for oil.
CAJ News

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