TUESDAY, 19 OCTOBER 2010 BY TOSIN FODEKE 

Finance Minister Olusegun Aganga has said Nigeria will not seek to achieve a $1 billion mark at its debut international bond market involvement, but is setting its target at $500 million.Aganga at the weekend, told Reuters at a conference in Abuja, that he had been advised that Nigeria could raise $1 billion, but said the sole aim was to set a benchmark in the international capital market rather than to raise more funds than necessary.

 

He added that, interview for the main underwriter or book runner for the planned $500 million global bond will commence this week so as to complete the issue before year-end.“At the moment we have approval for $500 million. We are not tempted at this stage to go for $1 billion,” he said.

 

“We are trying to accelerate the process. We will be interviewing bookrunners in London next week and once we do that they will be asked to start working immediately,”It would be recalled that, Barclays Capital and First Bank Nigeria Capital Ltd were appointed as advisers for the planned $500 million Eurobond sale.

 

The sale of Nigeria’s first Eurobond is expected to act as a benchmark so that local companies can price their bonds accordingly, and use funds from the sale to develop infrastructure and reduce dependence on oil exports.Aganga last month said at an investor roadshow in London that there was a huge amount of investor interest in Nigeria, which is Africa’s most populous country and its third largest economy.

 

The size of the bond sale could be increased to accommodate the greater interest, he said. It is thought the appointment of bookrunners could push into next year, after Nigeria’s general election in January. Aganga said that he wanted to set a “benchmark price” that would make it easier for domestic businesses to raise money with more confidence as corporate borrowing rates had declined substantially.

 

Nigeria is seeking to raise finance from the global debt markets, and fund its substantial $100 billion infrastructure deficit.Its appointment of Barclays Capital follows Morocco’s successful sale of –1 billion 10-year bonds last week – its first Eurobond since 2007. Senegal’s Finance minister said in June his country was looking to sell a $300 million bond next year to finance road projects and Tanzania it also planning a Eurobond sale within the next 12 months.

 

Countries with emerging economies are finding the global bond market conditions attractive because bonds are being issued at low yields, which generate high interest from investors who are “chasing yield”, looking to diversify their portfolios with investments that have the potential to improve. The investments are made comparatively even more attractive because the returns on fixed-income investments in developed economies are so low.

 

Other emerging countries preparing Eurobond sales include Albania, Azerbaijan, Mongolia and Jordan, which have appointed JP Morgan, HSBC and an Arab Bank/Credit Suisse consortium to advise on a $500 million Eurobond.

 

Source:Guardian