By Emeka Anaeto, Business Editor

LAGOS—In apparent show of economic strengthening, the Federal Government has stepped up its pricing for the nation’s debt instrument with a second tranche Eurobond issue amounting to USD500 million at a yield of 7.5 per cent, indicating a 37.5 bases points (bps) against the 7.875 per cent it pays for the original instrument of  USD1.0 billion, issued in February this year.

This is expected to save significant amount on annual coupon repayment obligations.

The latest issue, in the foreign borrowing deal brokered by Citibank, USA and Standard Chartered Bank, UK, acting as Joint Lead Managers with Stanbic IBTC Nigeria Plc as Financial Advisers, brings to USD1.5 billion Eurobond the total foreign instrument the government is using to raise funding for 2016 budget which is due to expire next month.

A statement from the Finance Ministry last night, explained that the terms and conditions of the latest Eurobond Notes will be identical to those of the Original Notes, paying a coupon of 7.875% per annum, maturing on February 16, 2032 with a bullet repayment of the principal together with the Original Notes.

“The successful pricing, which is 37.5bps inside the original coupon rate, demonstrates continued strong market appetite for Nigerian securities. This, despite continued volatility in emerging and frontier markets, shows confidence by the international investment community in Nigeria’s economic reform agenda,” the statement signed by the director of information in the ministry,   Salisu Na’Inna Dambatta, added.

It further stated: “When issued, the new Notes will be admitted alongside the original Notes to the official list of the UK Listing Authority and to trading on the London Stock Exchange’s regulated market. The Republic may apply for the Notes to be eligible for trading or listed on the Nigerian Stock Exchange and Financial Markets Dealers Quotations Over-the-Counter Securities Exchange.”

Pricing of the Notes comes shortly after Nigeria launched its National Economic Recovery and Growth Plan (NERGP) 2017-2020 on March 7, 2017. The plan focuses on policy objectives in five core areas; macroeconomic policy, economic diversification and growth drivers, competitiveness, social inclusion and jobs, and governance and other enablers. Key targets of the NERGP include reaching single-digit inflation, further growth in the agricultural sector, reducing unemployment, increasing operational energy capacity and domestic refining capacity, improving transportation infrastructure and stabilising the exchange rate, with an emphasis on implementation, monitoring and evaluation of these economic goals.

Commenting on the pricing, the Minister of Finance, Mrs Kemi Adeosun stated:  “The proceeds from this additional note issuance will go towards funding capital projects in the 2016 budget.  Infrastructure spending is at the heart of our National Economic Recovery and Growth Plan, which was released earlier this month and guides how we will deliver the urgent reform our economy needs between now and 2020. ”

In his own comments the Director General, Debt Management Office, DMO, Dr Abraham Nwankwo, stated: “Following the success of our US$1 billion note issuance in February, Nigeria is delighted to have increased our 2017 Eurobond programme to US$1.5 billion and to have secured the additional US$500 million. Nigeria was keen to take advantage of favorable market conditions and investor appetite for Nigerian debt to complete our foreign borrowing programme for the 2016 budget and deliver further funds for vital capital projects.”