By Ademola Alawiye

Thursday, 4 Nov 2010

Following the decision by the ministry of finance to kick off the $500m eurobond in December, Citigroup Incorporated and Deutsche Bank AG have been selected to act as bookrunners for the global bond.

A spokesperson for the minister of finance, Mr. Okwudili Ojukwu-Enendu, said in a statement on Tuesday that the two banks were chosen out of six banks that were screened.

He said, ”Six companies had gone through the final process, out of which these two were chosen.”

A bookrunner is usually an investment bank that performs the duty of a main underwriter in equity security issuance. The bookrunner works with other parties to manage the issuance. It also works with the financial advisers to ensure timely completion of the transaction.

Nigeria was forced to postpone the sale two years ago as a result of the global financial crisis in the international capital markets.

The Minister of Finance, Mr. Olusegun Aganga, had said that the issue, which was Nigeria‘s first eurobond, would act as a benchmark so that local companies could price their debt accordingly.

Aganga had said, ”Foreign investor interest in the eurobond has been strong, with some investors asking Nigeria to increase the size to $1bn. The country plans to use funds from the sale to develop roads, railways, hospitals and schools and reduce dependence on oil exports.”

The Director-General, Debt Management Office, Dr. Abraham Nwankwo, had said at an interactive session with journalist, that the main reason for the issue was not the money.

Nwankwo said, ”The value of the bond is less than what we raise in the bond market every month. We want to use it to set a benchmark so that it will be easy for a Nigerian investor to get money from the international market.”

Nigeria appointed Barclays Capital and FBN Capital Limited as advisers for the sale, while White and Case LLP, based in London, and Lagos-based Banwo and Ighodalo, are to provide legal advice.

Source: Punch