Foreign investors are seeking for a minimum of seven percent interest rate on the Federal Government of Nigeria’s upcoming $1 billion Eurobond offer with a 15-year maturity. Investors that attended the London-leg of the road-show held on February 3rd and February 6th, expressed concerns over the Naira exchange rate and the nation’s crude oil output. These two factors were their major consideration in pricing the bond offer.
“The real concern is oil production and foreign exchange. Will there be a further devaluation this year? The foreign-exchange policy is the elephant in the room,” said Oliver Weeks, Emso Asset Management Ltd who attended the February 3 meeting at London’s Corinthia Hotel. “They didn’t address it. The fact they’re doing the Eurobond before addressing it is a sign that the foreign-exchange policy won’t improve quickly.”
Kevin Daly, a money manager for Aberdeen Asset Management Ltd, London, said that Nigeria could raise 15-year bonds if the yield is about 8.0 per cent, or 10-year notes if they yield 7.5 percent. According to him, the value of the Naira should depreciate to about N380 per dollar in other to attract foreign investors to return to Nigeria’s local markets. “My takeaway from the meetings is that they’re going to hold the line on the naira. They didn’t promise anything concrete. They said they were working on fine-tuning the foreign-exchange system. But what does fine-tuning mean? It’s clear they’re getting tired of answering questions about the naira,” Daly said.
Finance Minister Kemi Adeosun, Central Bank Governor Godwin Emefiele and other senior government officials have been meeting investors in London and the United States on a road-show to issue the bond.
By Dike Onwuamaeze