Federal Republic of Nigeria successfully conducts a US$500 Million Debut Bond Issue
Advised by Banwo & Ighodalo and White & Case, the Federal Republic of Nigeria has launched its debut international bond issue. The US$500 million 10-year bond, which was sold to US investors under Rule 144A and outside the US in reliance on Regulation S, is listed on the London Stock Exchange.
Nigeria is Africa's most populous nation and has the second-largest economy in sub-Saharan Africa. Overall, regardless of the negative effects of the global financial crisis, Nigeria remains attractive to investors based on its significant oil reserves – more than any other country in Africa – as well as its growing private sector and banking reforms. The transaction which recorded a resounding success despite the warm ratings it received from reputable rating agencies reinforced Nigeria’s position as the economic and political leader of Africa.
Dr. Abraham Nwankwo, Director General, Debt Management Office (DMO) explained that in order to maintain the role of ensuring that public debts in Nigeria fall within a manageable limit, the DMO has entered into partnership with states to establish debt management departments. This, according to him is with a view to updating their data.
The DMO boss said, among other things, that the process of ensuring transparency and accountability in borrowing undertaken by the various tiers of government has commenced.
Furthermore, he said the mandate of the DMO is to manage the country's public debt in an efficient and effective manner.
"Efficiency and effectiveness include funding government needs at minimum cost and within the acceptable risk profiles. That means that if and when government wants to fund its various needs and programmes, the DMO ensures that the assignment is carried out in a manner that is consistent with national needs and aspirations. In this context, it is important to go back to the origination of the borrowing needs”.
"For our country, whatever needs to be done is captured in the annual budget as a deficit for the year. And it is part and parcel of the Appropriation Act of the National Assembly. So whatever is contained in the appropriation Act for the year as the amount needed from the domestic and external sources, the DMO goes ahead to ensure that the amount is being obtained efficiently and effectively”.
"Having borrowed then, it becomes important that the portfolio be managed in such a way that the country does not secure additional cost and that is assured through prompt servicing of the indebtedness and to ensure that the debts are serviced as and when due. It also ensures that the principal repayment which is usually done through installments are also made as at and when due.
Law firm Cleary Gottlieb with a team led by Simon Ovenden and counsel Mark Adams advised Citibank and Deutsche Bank as joint lead managers. Barclays Capital and FBN Capital acted as financial advisers to the Federal Government of Nigeria
The Banwo & Ighodalo team was led by partner Asue Ighodalo and included associates Azeezah Muse-Sadiq, Dipo Okuribido and Ayomipo Wey. Banwo & Ighodalo was established in 1991 and over the past twenty years has become one of the most respected and well known law firms in Nigeria. Having being involved in a number of national and cross border transactions the firm has a global reputation for excellence and has again clearly demonstrated its position as the leading capital markets firm in Nigeria.
Adviser to Federal Republic of Nigeria
Partner Asue Ighodalo commented:
“As this was the Federal Government of Nigeria’s first ever issuance of bonds on the international capital market, we were, as Nigerian Counsel to the Government, required to advise on several complex and sometimes, novel statutory, regulatory, administrative and structural challenges whilst ensuring that the terms of the Notes were attractive to investors and complied with all applicable laws. Indeed, the transaction brought to bear the personalised, solution-focused and efficient service offered by the firm. It was an interesting and challenging transaction and we are proud to have been part of the Federal Government team”