Due to increased investor demand, the International Finance Corp (IFC) has increased the size of its first Nigerian local-currency bond sale to N12bn ($76.3m), more than double its initial size.
The lender, a unit of the World Bank had initially planned to issue N8bn worth of bonds, but increased it after total orders reached N20bn, said its vice-president and treasurer, Jingdong Hua. The “Naija” bonds maturing in February 2018 were sold with a 10.2 per cent coupon, he added.
The yields of Nigerian bonds have dropped since JPMorgan Chase & Co., the world’s biggest underwriter of emerging-market debt, said in August it would add the country’s securities to its benchmark GBI-EM index in October last year. Barclays Plc will also add Nigerian debt to its local-currency government bond index in March.
“The market is feeling hot because it’s being included in the JPMorgan and Barclays indexes,” said Hua. The bond will help “pave the way for international issuers” to sell in Nigerian currency, Hua said.
Data from the Financial Market Dealers Association website shows that yields on the government bonds of Africa’s biggest oil producer maturing January 2022 have fallen 97 basis points, or 0.97 percent, this year to 11.01 percent.
The IFC’s committed portfolio in Nigeria of $1.1bn is its largest on the continent and the 8th largest in the world. The lender announced in May a pan-African medium-term bond program, which focuses on countries including Botswana, Kenya, South Africa, Namibia and Zambia. The Naija bonds are not part of the program.
It is also planning to issue another one or two African local-currency bonds, as according to Hua, they are working hard to promote local currency lending.
The Washington-based lender’s investments in sub-Saharan Africa have tripled since 2006, reaching $4 billion last year.