Nigeria is projecting as much as some US$2 billion through the issuance of dollar-denominated bonds to domestic investors in the West African country, according to the lead arranger United Capital Plc.
Reflecting its strategy to attract foreign investment and support its economy. The government aims to issue these bonds within the country, targeting local investors who hold foreign currency. This move is part of broader efforts to stabilize the economy, manage debt levels, and improve foreign exchange liquidity in the domestic market.
This bond sale also represents a shift in strategy, as Nigeria has typically relied on Eurobonds or other international debt instruments to raise foreign currency. By focusing on a domestic dollar bond sale, the government aims to tap into the existing dollar reserves within the country, offering competitive returns to investors while managing the risks associated with foreign exchange instability.
The domestic dollar bond has a program size of US$2 billion, with series one opening on Monday at a size of 500 million dollars, the investment bank said in an emailed document. The bonds will have a five-year tenure.
The bond, which is available to Nigerians residing in the country and abroad as well as local pension firms, is targeting funds from “domiciliary accounts, diaspora remittances and foreign investments,” United Capital stated.
Dollar cash deposits will not qualify unless they were made into domestic accounts at least 30 days before the issue, it said.
The government approved a 28.8 trillion naira ($18.1 billion) spending plan for 2024, with a deficit of 9.8 trillion naira, which it aims to finance from domestic and international borrowing.
The success of this initiative will likely depend on investor confidence in Nigeria’s economic policies and the potential returns on investment relative to global market conditions.
