Nigeria has announced plans to offer domestic bonds in US dollars starting next Monday. With this dollar denominated domestic bond, the Nigerian government hopes to raise $500 million from investors.
The $500 million bond issuance was announced by Dr Gbadebo Adenrele, Managing Director, United Capital Group. He made the announcement during a meeting with investors organised by the Debt Management Office, DMO.
This $500 million bond will provide bullet repayment in US dollars when it matures. Also, the full repayment of the principal amount will be done at the end of the five year term.
Speaking at the event, the Minister of Finance, Wale Edun, said the bond will help bring stability to the foreign exchange market. In addition, he said the bond will also boost the country’s external reserves. He said the new bond will be beneficial to citizens and non citizens in Nigeria and in the diaspora.
Speaking further, Edun said the bond will help grow the external reserve from its current value of $36.62bn. He said the $500 million bond will attract more foreign direct investment. According to him, this will bring a higher reserve and a stronger exchange rate. This can bring more stability which can help reduce inflation and the interest rate.
With this bond, the Nigerian government is hoping to attract local and foreign investors. This will increase dollar inflow and help rejig the economic environment. Also, attracting foreign investment is key to creating jobs, boosting productivity, creating more borrowing opportunities and tackling poverty in the country.
The bond has a 5 year tenor with a minimum investment amount of $10,000. Also, the repayment will be done in USD upon maturity. This will preserve the value for the investors. In addition, the bond will be listed on the FMDQ and the Nigerian Exchange Limited.
This bond offering comes after the Federal Government announced two savings bond pegged at N1,000 per unit. The first offer is a two year savings bond due on August 21, 2026 at an interest rate of 17.373% per annum. Meanwhile, the second offer is a three year bond due on August 21, 2027 at an interest rate of 18.373% per year.
The two bonds went on sale on August 12, 2024 and will close on August 16th, 2024.
