$500m Domestic Bond To Boost External Reserves – Edun

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has stated that the $500 million domestic FGN US dollar bond will enhance external reserves and help stabilise the foreign exchange situation in the country.

He stated this at the hybrid roadshow for the domestic FGN US Dollar Bond with investors, held yesterday in Lagos.

The launch of the Series one Domestic USD Bond, aiming to raise at least $500 million from both local and international investors will commence on August 19, 2024. The bond offers bullet repayment at maturity in US dollars, ensuring full repayment of the principal amount at the end of the five-year term. The bond is open to Nigerians and non-Nigerians resident in Nigeria, Nigerians in the Diaspora, and Qualified Institutional Investors. Investors can subscribe with a minimum amount of $10,000, with additional investments in multiples of $1,000 thereafter.

Edun said “We are here today to discuss dollar funding, which is critical for the exchange rate and essential for stabilising investment and the economy. The Central Bank has adopted the ‘willing buyer, willing seller’ model, which has proven efficient and has contributed to the influx of additional dollars.

“Specifically, the flow of dollars into the economy has improved through portfolio investors, foreign direct investors, and multilateral organisations that have supported the President’s macroeconomic policies.

Today, we are playing a significant role in this process with the domestic issuance of US dollar bonds, aimed at increasing the flow of dollars into the economy.”

“We are already seeing success with the combination of monetary and fiscal policies, which is attracting foreign portfolio investments (FPIs). Additionally, foreign direct investments are starting to increase, particularly in the oil and gas sector.

“More foreign exchange leads to higher reserves and a stronger exchange rate, which can reduce inflation and, consequently, interest rates. This creates opportunities for borrowing, investing, increasing productivity, creating jobs, and reducing poverty,” he said.

He noted that Nigeria’s external reserves, as of August 12, stood at $36.62 billion, according to data from the Central Bank of Nigeria.

Detailing the offering, managing director of Investment Banking at United Capital, the lead issuing house, Dr Gbadebo Adenrele disclosed that the $500 million domestic bond targets Nigerians, non-Nigerians residing in the country, and Nigerians in the diaspora.”

Adenrele said, “one of the key aspects of this bond issuance is that it will be listed on platforms such as the Nigerian Exchange and FMDQ, making it accessible to a variety of investors.”

The director-general of the Debt Management Office (DMO), Patience Oniha, noted that the settlement date for the domestic dollar bond auction will likely be in 10 days after the auction date.