By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-Nigeria’s Debt Management Office (DMO) Friday said about 191 investors sought the nation’s just concluded $1.0 billion Eurobond offer.
Abraham Nwankwo, Director General (DG) of the Nigeria’s DMO revealed this in his presentation at a retreat for financial journalists with the theme “Opportunities for the Private Sector from Public Debt Management Achievements”.
Nwankwo said the outcome of the $1.0 billion Eurobond offering in July 02, 2013, where about 191 different investors demanded Nigeria’s bond was an indication of how large in terms of effective demand; not just for the Nigerian portfolio investment, but for Nigerian foreign direct investment has become.
“Following the outcome of the $1.0 billion bond offering in July 02, 2013, where about 191 different investors demanded Nigeria’s bond. You have now an indication of how large in terms of effective demand not just for the Nigerian Portfolio investment, but for Nigerian Foreign direct investment,” he said.
The Nigeria’s DMO chief said this development has taken the country to the opportunities that have been created for the private sector both locally and internationally.
“By successfully addressing some of the challenges and constraints that plagues the Nigerian public debt management, it created windows of opportunities for the private sector to raise long term capital for the development of the real sector and infrastructure,”he said.
According to him, already, some private sector firms has explored and taken advantage of these opportunities to issue bonds in the domestic bond and the international capital market (ICM).
Nwankwo said domestic market taking advantage of this development, at least 20 Nigerian private companies has issued long term debts to raise about N200 billion from 2005 to 2012 to fund the development of the real sector.
He said opportunities exists for growth in terms of number and diversity of debt issuers, range of instruments, size and investor base.
The DMO chief affirmed that Nigeria’s yield curve domestically has been elongated to 20 years. Therefore, those that needs between five, (5) 10 and 20 years money for agriculture, solid minerals and infrastructure have a market where they can raise money.
“The days have gone when Nigerian private sector will complain that one of their major concerns was lack of long term capital in the market; because their banks will lend them money for a maximum of 24 months. Actually because banks liabilities are short term, there is every need for us to have a credible debt market for long term funds.
Nigeria’s private sector should no longer complain that there are no markets where they can raise long term funds; they can issue their bonds and raise money to up to 20 years,” Nwankwo said.
He further affirmed that to buttress this development, the International Finance Corporation (IFC) a member of the World Bank group in March 2013, issued a Naira denominated debt instrument worth $76 million in the domestic debt market.
“It was a way of demonstrating that this market exists; so nobody should complain that there is no market for long term funds in Nigeria, if a global financial institution like the IFC a private sector arm of the world bank could consider that such a market exists in Nigeria and succeeded in issuing its own bond in the Nigerian Bond market, then nobody should complain; but take advantage of it,”he affirmed.
According to the DMO chief, on the external market, four (4) Nigerian financial institutions issued bonds to raise about $1.45 billion in the international capital market (ICM) between January 2011 and July 2013.
The Africa Development Bank (ADB) has said infrastructure deficit in Nigeria is at $350 million, in response to remedy the situation; the federal government floated a $1.0 billion Eurobond to address key infrastructures.
Nigeria had issued a $500 million 5-year bond at a yield of 5.375 per cent and a $500 million 10-year bond with a yield of 6.625 percent (6.625%).
