Nigeria plans first Eurobond sale since Russia’s war on Ukraine

Nigeria plans to raise as much as $1.5 billion in overseas debt, becoming one of the first sovereigns to return to the Eurobond market since the start of Russia’s war on Ukraine.

The debt is part of the government’s plan to raise $6.1 billion overseas, a person with knowledge of the matter said, asking not to be identified before a final announcement. President Muhammadu Buhari’s administration last year raised $4 billion while waiting for better market conditions to raise the balance.

The return of Africa’s largest crude producer to the market at a time when investors are wary of volatility across financial markets shows the urgent need for Nigeria’s government to narrow its budget deficit. The International Monetary Fund forecasts the gap will widen to 6.4 per cen of gross domestic product this year from a pre-pandemic average of 4.3 per cent, due to the rising cost of fuel subsidies.

The yield on Nigeria’s 6.125 per cent, seven-year bond that it sold last year rose 25 basis points to 7.805 per cent by 2:01 p.m. in London on Thursday.

Pricing on the new seven-year debt tightened to about 8.5 per cent from an initial target of about 8.75 per cent. Orders for the offering have exceeded $2.75 billion, a person with knowledge of the matter said, asking not to be identified because the information is private.

“We are in the market,” Patience Oniha, director-general of Nigeria’s Debt Management Office, said in a text message. “Amount will be determined in the course of the book building,” she said, declining to confirm the amount.

Borrowers have been on the sidelines since Russia’s invasion pushed up funding costs. Turkey was the second sovereign to announce an overseas bond sale on Thursday.

Lagos-based Chapel Hill Denham is the bookrunner for Nigeria’s offering.

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