Nigeria’s $1bn bonds oversubscribed –Okonjo-Iweala

Finance Minister, Dr. Ngozi Okonjo Iweala 

The Minister of Finance, Mrs Ngozi Okonjo-Iweala, said on Wednesday that Nigeria returned to the capital market after two years of absence and sold $1bn bond with ease, the News Agency of Nigeria reported.

She said this in Abuja while briefing journalists on the recently concluded road show in Europe and US to float the billion dollar bond to international investors.

She said the bonds, which were four times oversubscribed, were improvements on investors’ response to the $500m bonds floated in 2011.

“The reason we are excited is because as you know, these are turbulent times, especially following expectations of tapering of Qualitative Easing by the US Federal Reserve Bank.

“So, the fact that Nigeria could go to the bond market, after waiting a while and we got four times our subscription shows confidence in the strength of the Nigerian economy,’’ she said.

Okonjo- Iweala said that the transaction attracted top investors primarily from the US, Europe and Asia.

“The demand was such that we couldn’t meet all of them. Over 200 investors could not get any share of the bonds because we were oversubscribed,” she added.

The minister said the $1bn bond was offered in two categories at the international capital market.

She said that $500m was offered as a five-year bond at 5.125 per cent interest rate, while the other $500m was offered as a 10-year bond at 6.375 per cent interest rate.

She added that the two-category offer gave Nigeria the opportunity to achieve an overall cheaper cost of borrowing.

“This rate is much better than what we got when we did $500m dollars in 2011. This means that people have more confidence in our economy which is very significant for us,’’ she said.

Okonjo-Iweala said that the money was meant to support infrastructural projects within the country and not for budget support.

The minister said, “What we have in mind is investment in the power sector. We are looking at funding the transmission grid. As you know, we have privatised both the generation and distribution power plants.

“But the transmission and grid remain in government hands and we must keep up with transmission in order to make the entire power sector work.

“We are also investing in building a gas pipeline from the east of the country to the west where we have all these power stations with no access to gas.

“We have already spent about $400m on it, so we want to complete it with some of the money we are raising now,’’ she said.