By Stanley Opara with agency reports

Tuesday, 18 Jan 2011

Nigeria will start meeting investors in the United States and London on Tuesday (today) to build support for its first $500m international bond sale. 

The 10-year bond sale is Nigeria’s first approach to the international markets.

The country would seek to raise the sum after meetings with Finance Minister, Mr. Olusegun Aganga and would-be investors, the minister’s spokesman, Mr. Bayo Adeniji, told Bloomberg on Monday.

Nigerian officials would meet investors in two cities in the United States after London, Adeniji said, without providing further details. 

Nigeria is rated B+ by Standard and Poor’s, four levels below investment grade. Senegal, a similarly rated West African country, has $200m of dollar bonds due in 2014 that yield 8.543 per cent, according to prices on Bloomberg. 

Reuters also quoted the Director General, Debt Management Office, Mr. Abraham Nwankwo, as saying that, “The bond issue will be concluded on Friday January 21. A new window is being opened, particularly for the private sector to have access to the international capital market.” 

IFR, a Thomson Reuters news service, said the ‘roadshow’ would begin simultaneously on the US West Coast and in Germany before continuing in New York and London on Wednesday and concluding in Boston the following day.

Nigeria’s planned sale of dollar-denominated bonds, if successful, may encourage Kenya to go ahead with its own debut sale of Eurobonds, a sub-Saharan African strategist for Citigroup Incorporated, Mr. Leon Myburgh, recently said. 

Kenya, East Africa’s largest economy, more than two years ago shelved plans to sell bonds on the international market after the global financial crisis reduced investors’ appetite for risk. The government is “still studying the situation,” Treasury Economic Secretary, Mr. Geoffrey Mwau, said on January 12. 

The $500m bond issue was designed to set a “benchmark” to enable banks in Nigeria to access funds, Aganga said on January 7.

Citigroup had predicted that the bond offer, Nigeria’s premier attempt to access funds in the global fund market, would attract huge interest from western investors and others from the emerging markets.

Its Chief Executive Officer, Mr. Vikram Pandit, said the economic potential of the country, reforms in key sectors which had strengthened corporate governance and the rule of law, and the growth prospects evidenced by the significant inflow of investments in the last decade, would make the bond a huge appeal for investors. 

In this light, the Federal Government had announced Citigroup and Deutsche Bank AG as book-runners for the sale of its $500m Eurobond. The government first made public its plans to borrow from the international bond market two years ago, but the global financial crisis delayed the move.

Pandit, however, said current economic growth rate in Africa, particularly Nigeria and South Africa, the region’s two leading economies, would continue. He added that, “Growth today is being driven by emerging market and I see the promise. Nigeria is a very important part of that promise. 

“We at Citi believe we can support the present growth by doing what we know to do best – connecting Nigeria and the world and the world and Nigeria.”

Source: Punch