Nigeria Heads to London, U.S. for First Eurobond Since 2013

LAGOS (Capital Markets in Africa) – Nigeria will meet investors this week for its first Eurobond sale in more than three years as Africa’s most populous nation battles an economic contraction and the worst dollar squeeze in almost a decade.

Beginning Friday, officials will hold roadshows in London and the U.S. before the proposed issue of 15-year bonds, the country’s longest-maturity dollar notes yet, according to a person familiar with the matter, who is not authorized to speak publicly. Finance Minister Kemi Adeosun and the central bank’s Deputy Governor Sarah Alade will lead the meetings, to be organized by Citigroup Inc. and Standard Chartered Plc. The delegation will also include Udo Udoma, the budget minister, and Abraham Nwankwo, head of the Debt Management Office.

The proceeds, along with those from a $1 billion loan Nigeria will seek from the World Bank, will be used to fill the government’s funding gap as it battles plummeting revenue from oil exports and shortages of fuel and foreign-currency. President Muhammadu Buhari’s government is proposing a record budget this year to lift the economy out of its slump.

The dates for the roadshow are: London: February 3, Los Angeles: February 6, Boston: February 7, and New York: February 8

Nigeria has $1.5 billion of Eurobonds outstanding, all of which were sold with maturities of five or 10 years. It last tapped the market in July 2013. The yield on Nigeria’s $500 million bond due in July 2023 rose for a seventh day, by two basis points, to 6.92 percent as of 3:22 p.m. in Lagos, the commercial capital.

The country will apply for the World Bank loan once lawmakers approve this year’s budget, Adeosun told reporters Feb. 1. The government forecasts the fiscal deficit to be 2.36 trillion naira ($7.5 billion) in 2017, she said.

Gross domestic product probably shrank 1.5 percent in 2016, which would be the first full-year recession since 1991, according to the International Monetary Fund. Foreign investors have fled the country, saying the central bank’s imposition of capital controls has left the naira overvalued. While the currency trades at around 315 per dollar on the official interbank market, it fell to a record 500 on the black market this week.

Capital inflows fell 47 percent in 2016 to $5.1 billion, the lowest since 2007, according to the National Bureau of Statistics. Portfolio investment declined by 70 percent and foreign direct investment shrank 28 percent, while the stock market fell 41 percent in dollar terms, the worst performance in the world.