The successful issuance of the $500 million Eurobond in January has improved Nigeria’s path towards being regarded as an emerging market economy.
The director general of the Debt Management Office (DMO), Abraham Nwankwo, in his keynote address at the two-day workshop on ‘Investments in Bonds and Securities in Emerging Economies’ organised by the Chartered Institute of Bankers of Nigeria in Lagos yesterday, said the debut sovereign bond has created visibility for Nigeria in the international capital market and would provide support for the attainment of Vision 20: 2020 and FSS (Financial System Strategy) 2020.
Both development plans aim to position Nigeria and the financial sector to be among the top 20 globally by the year 2020.
“One of the benefits of this for the country is that it has helped to develop an investor base in the international capital market for securities, including equities to be issued out of Nigeria,” Mr. Nwankwo added.
On January 21, Nigeria issued a 10-year $500 million Eurobond with 7.0 per cent yield which was 2.5 times oversubscribed by investors from 18 countries spanning Europe, the United States, Asia, and Africa.
Global map
Minister for finance, Olusegun Aganga, at the conclusion of the issue, said its success would drive investment into Nigeria.
“This transaction clearly puts Nigeria on the global map. We now have a transparent and internationally observable benchmark against which international investors can accurately price risk,” Mr. Aganga said.
Four emerging economies, namely Brazil, Russia, India, and China are regarded as the next world economic powers, with 11 others namely Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey, and Vietnam are considered the next emerging economic giants and could be important source of growth and opportunity.
According to Mr. Nwankwo, emerging economies have become significant to the world economy and may become even more relevant in future.
“Securities issued by emerging economies will continue to offer superior returns due to their higher risk levels. The margins may narrow as some of the countries in this category become stronger and demand for securities from emerging economies increase,” Mr. Nwankwo said.
He said growing prominence of local bond issuance relative to borrowing from external sources in various forms has led to rapid development of domestic bond markets. This, he said, has helped to encourage development of domestic savings and investment behaviour.
In the nine years between 1999 to 2007, nine corporate issues worth N33.75 billion, averaging N3.75 per annum, was floated while from 2008 and last year, eight issues were concluded worth N92.58 billion, average of N30.86 billion per annum.
