Finally some good news. The $1bn Eurobond sale was successful. It was almost 8 times oversubscribed with orders up to $7.8bn (we will still take only a $1bn). At 7.875% it is a lot lower than the 8.5% that was the initial target, although still a bit high. Especially considering returns elsewhere. You literally have to pay Germany to hold your money for instance. All in all a good outing though.
I am going to hold my hand up and say “yes, I was skeptical”, and for good reason too. They tried to do it last year but it went the way of arsenals title challenge. Throw in the fact that Nigeria is close to pariah status when it comes to policy then there was reason to be skeptical. I mean, they literally had to hide Emefiele for most of the road show and dodge questions about the foreign exchange policy. Still, they did a good job and so big ups to them.
The successful sale demonstrates that Nigeria is still a good investment destination if we implement the right policies, especially with regards to the foreign exchange market. Selling Eurobonds sidesteps the naira risk and so its easier to take a bet on. But our domestic markets are still being ignored which is a problem. We really need to fix that foreign exchange market.
Finally, lets not get carried away. Its only $1bn. We plan to raise somewhere around $6bn from a mixture of domestic and foreign borrowing this year, so we still have some way to go. Our debt to revenue ratio of around 40% just ticked a bit higher too, which means we are a tiny bit closer to insolvency. We could also still blow it all on a wild goose chase like defending the naira or paying salaries. Rumours say we already spent almost half the receipts from the Eurobond through some bridge loan we got a while ago.
Still we can at least breathe a sigh of relief that it went well.