Having just started trading on the London Stock Exchange, Nigeria’s first international issuance since 2013 has proved successful: its $1 billion Eurobond listing was nearly eight times oversubscribed, with total orders of $7.7 billion. The listing attracted high-quality investors across the United States and Europe, whose financing will be instrumental in Nigeria’s long-term infrastructure projects.
Going International Pays Off
The 15-year bond, paying a coupon rate of 7.875, is the longest ever maturity for an international Nigerian issuance. Nigeria is one of just nine African states with sovereign bonds listed in London. This builds on the success of recent high-profile listings such as Israel’s Eurobond offering of €2.25 billion in London.
Ibukun Adebayo, head of the Middle East, Africa and South Asia, International Markets Unit, London Stock Exchange said:
“The success of Nigeria’s bond listing is a strong statement of international investor interest in building exposure to Nigeria’s economy. It reinforces the London Stock Exchange’s status as a strong partner to Nigeria and the City’s ability to provide a deep additional channel of finance for the development of Nigerian infrastructure and the growth of the economy.”
From London to Lagos and Back
The London Stock Exchange Group continues its support for the development of African capital markets and investment in African companies. Currently, 111 African companies are listed or trading on London Stock Exchange, with total market capitalisation of over $200 billion. In fact, is the largest concentration of African quoted companies outside of Johannesburg. Over the last 10 years alone, a total of $26.1 billion has been raised for African companies listed on the exchange.
On working with the London Stock Exchange Group, Oscar N Onyema, OON, CEO of the Nigerian Stock Exchange stated,
“Our collaboration with London Stock Exchange is deliberate and strategic. It is geared at encouraging seamless cross-border access between our capital markets to ultimately drive deeper capital markets that enable capital formation for businesses and Governments; create larger liquidity pools and greater competitiveness for our investors; and enhance capacity and promote diversity of investment products to meet the needs of a wide range of investors and issuers.”
In 2014, the LSE and NSE signed a capital markets agreement to support dual listings in London and Lagos. This made the listing and trading of companies listed in both UK and Nigerian markets more efficient. Nigerian oil and gas business, Seplat was the first company to simultaneously list shares in London and Nigeria, raising as much as $500 million in 2014.
A Promising Future
These developments indicate promising prospects for the Nigerian economy. Despite suffering its worst recession in 25 years and, inflation nearing 19%, many investors remain confident in the long-term economic potential of the nation. If anything, Nigeria’s present economic challenges are likely to strengthen it, making it more antifragile and receptive to the challenges it will face in the long-term as a developed economy. While investments in bonds alone do not give the full picture of the nation’s prospects, they do give an indication of the
While investments in bonds alone do not give the full picture of the nation’s prospects, they do give an indication of the direction its economy is likely to head in. This becomes especially important as greater progress is made towards refining the management of factors of production within the region.
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