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Nigeria to raise $1bn from international capital market, seeks managers, adviser

by Business News Report

The federal government has set machinery in motion to raise $1 billion from the international capital market in 2016, the Debt Management Office has disclosed. The DMO in statement on its website said it is seeking two lead managers and a financial adviser to organise the issuance of $1 billion of Eurobonds this year.

The $1billion sale is the first tranche of a $4.5 billion Nigeria Global Medium-Term Notes Issuance Programme that runs through 2018, DMO said in the statement. The DMO is seeking to appoint two international banks as joint lead managers and a local bank as financial adviser for the whole program. Bids are to be submitted by noon on September 19, in Abuja. The move the statement said is to “enable Nigeria to have the flexibility of quickly taking advantage of favorable market conditions in the international capital market to raise funds if and only when the need arises”.

The statement by DMO reads in part “The Federal Republic of Nigeria (FRN) is in the process of establishing a $4.50 Billion Federal Government Medium Term Note (FGMTN) programme, 2016-2018, out of which it intends to issue $1.00 billion Eurobond in the year 2016. The purpose of establishing the FGMTN programme is to enable the FRN have the flexibility of quickly taking advantage of favourable market conditions in the International Capital Market (ICM) to raise funds, if and only when the need arises.

“In view of the foregoing, the Debt Management Office (DMO), on behalf of the Federal Government of Nigeria, wishes to appoint: two international banks as Joint Lead Managers; and, one Local bank as Financial Adviser for the planned FGMTN programme and the issuance of $1.00 billion out of the $4.50 billion FGMTN programme in 2016. The parties will be appointed separately by the FRN, but will be required to work together to ensure a successful Transaction.

“The joint lead managers and the local financial adviser shall be expected to render the following services: Assist the DMO with the determination of the features of the FGMTN, 2016-2018, programme; requirements for listing of the FGMTN, particularly in relation to subscription and settlement; to ensure its acceptance by the target investors; work with legal counsels and the DMO to ensure the FG MTN programme complies with relevant legal and regulatory requirements in the respective jurisdictions; advise the DMO of the appropriate strategy for the FGMTN programme and the issuance processes and procedures for securities offerings under the programme; and work with legal counsels and the DMO in connection with the preparation of the Programme/Dealer Agreement, and any other documents that are related to the offering of securities under the FGMTN.

“Such advisers are to collaborate with the DMO and other transaction parties in the preparation of the base prospectus and other offer documents required to execute the FGMTN, as well as, any other documents to be submitted to relevant regulators in the United States of America, the United Kingdom and other jurisdictions as may be required”.

The Eurobond sales this year would be the first since Nigeria tapped the market in July 2013 and an inaugural issue in 2011. President Muhammadu Buhari approved a record 6.1 trillion naira spending plan this year and the Treasury intends to borrow to plug the budget’s N2.2trillion deficit. The Nigerian government is increasing spending to stimulate the economy after it contracted by 0.4 percent in the first quarter as revenue dwindled amid lower oil prices and a decline in output. The economy could shrink 1.8 percent in 2016, according to the International Monetary Fund

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