Listings and Quotations

FMDQ Lists $1.00bn Federal Government of Nigeria Eurobonds Posted on: March 5, 2017

Nigeria Makes History; With 1st Ever Listing of Eurobond on FMDQ OTC Securities Exchange Paves Way for Domestic Listing of Nigerian Corporates’ Eurobonds Ignites the vision for an ‘Afrodollar’ market. Healthy financial markets, the world over, form one of the key underlying basis for successful economies. From the developed nations of the United States of America, United Kingdom, to the emerging markets in Turkey, India and the developing countries such as Nigeria, Egypt etc., fully functional and well-regulated financial markets have fast tracked and endeared investors into these economies. This goes to say that the crucial role of the debt capital markets in sustaining the growth and development of any economy cannot be overemphasised. The Federal Government of Nigeria (FGN), on February 9, 2017, again demonstrated its recognition of this key requirement for successful economies when it announced its intention to list, for the first time in the history of the nation, its Eurobond domestically. The FGN, through the Debt Management Office (DMO), successfully raised $1.00bn from the international markets in February, and following a series of strategic engagements that spanned at least three (3) years with FMDQ OTC Securities Exchange (FMDQ or the OTC Exchange) and other stakeholders on the importance, to the nation’s debt capital market and economy, of listing domestically, the sovereign’s Eurobonds, the DMO achieved this most commendable feat when it listed the $1.00bn Eurobond on FMDQ last Friday.

In a unique and prestigious Ceremony held to commemorate and honour the issuer for the listing of the first foreign currency-denominated bond – $1.00bn Federal Government of Nigeria Eurobond (FGN Eurobond), 7.875% FGN 16-FEB-2032 – on FMDQ and indeed in Nigeria, the OTC Exchange proudly hosted the Federal Government of Nigeria, represented by the Director-General of the DMO, Dr. Abraham Nwankwo, along with key representatives from the DMO. The OTC Exchange was also honoured to host the Securities and Exchange Commission (SEC), the adviser to the issuer and co-sponsor of the Eurobond on FMDQ, Stanbic IBTC Capital Limited, the arranger/dealer and co-sponsor of the issue on FMDQ, Standard Chartered Capital and Advisory Nigeria Limited, and other parties to the listing, including representatives of Citigroup Global Markets Limited and the legal advisers to the issue, Banwo & Ighodalo and Udo Udoma & Belo-Osagie, amongst others.

Whilst making the opening remarks, FMDQ’s Chairman, Dr. (Mrs.) Sarah O. Alade (OON), who was ably represented by the Vice Chairman of FMDQ, Mr. Jibril Aku, congratulated the issuer on this epochal step, noting that this move by the FGN to list on a domestic exchange, in addition to listing offshore was a welcome development, and a stance which would rightly position the nation to maximise its potential via the debt capital market. In line with FMDQ’s vision for the transformation of the markets, the OTC Exchange, since its debut onto the Nigerian financial markets landscape, already granted permitted trading status for $1.50bn of the previously issued FGN Eurobonds and $3.15bn of Eurobonds issued by Nigerian companies, ensuring price formation and providing information transparency to protect investors interests.

The SEC’s Director-General, Mr. Mounir Gwarzo, ably represented by Mr. Adamu Sambo, in his remarks, also commended the issuer for achieving this milestone and reiterated the SEC’s commitment to continue to support the development of the nation’s debt capital markets, ensuring that integrity and efficiency are always upheld for the protection of investors.

Delivering the keynote address at the Ceremony, Dr. Abraham Nwankwo, highlighted critical milestones achieved by this transaction, which included, inter alia, being the longest tenored debt security, at fifteen (15) years, issued by the Federal Government of Nigeria in the international capital markets. The transaction also marked the first outing by the FGN since 2013, and the first issued by a sovereign from Sub-Saharan Africa, in 2017. Dr. Nwankwo, whilst emphasising the nation’s recognition that the wide infrastructural gap, which constrains the development efforts of the nation, could be better matched by tapping into long-term financing options, via domestic and foreign debt capital markets, underscored the confidence of the international markets in the potential of Nigeria’s economic development as evidenced by the over-subscription in the Eurobond. He also commended the crucial support of key stakeholders, including the Honourable Minister of Finance, in achieving this feat.

Stanbic IBTC Capital Limited, represented by Mr. Yinka Sanni, the CEO of Stanbic IBTC Holdings PLC, lauded the efforts of the DMO in achieving this milestone transaction, commenting, “we wish to first and foremost congratulate the Federal Government of Nigeria, as this is indeed a testament to international investor confidence in Nigeria’s roadmap towards economic recovery and growth. We equally wish to congratulate the Federal Ministry of Finance team, led by the Honourable Minister of Finance, for a job very well done on this highly successful return to the international capital markets. The overwhelming success of the transaction on the whole evidences the underlying potential of Nigeria, and Stanbic IBTC Capital Limited is indeed proud to be part of this transaction. We are also pleased to sponsor the quotation of this Eurobond on FMDQ’s platform. Though Stanbic IBTC Capital Limited has sponsored many listings on FMDQ’s platform, this particular listing is very special as it represents the first ever Eurobond on the OTC Exchange. We believe this is yet another commendable step by FMDQ towards deepening the domestic debt capital markets, by enhancing access of local investors to internationally traded securities”.

Similarly, Standard Chartered Capital and Advisory Limited, represented by Mrs. Bola Adesola, CEO Standard Chartered Bank Nigeria Limited, during her remarks highlighted, “we are pleased to have sponsored the listing of the FGN 15-year 7.875% Eurobond on FMDQ, Nigeria’s premier fixed income listing exchange. The transaction was a successful one that shows the resilience of the Nigerian economy and the many economic factors working to promote a more sustainable economic future for the country. Standard Chartered has been and remains a key supporter of the FGN serving in several capacities such as being the sovereign ratings advisor to the Government. We acted as Joint Lead Manager on this issue and are encouraged by its global acceptance. This is one of the many ways we as a bank continue to reiterate our commitment to Nigeria as we assure our stakeholders that we are truly here for good”.

In his closing address, Mr. Bola Onadele. Koko, MD/CEO of FMDQ, commented, “the OTC Exchange shall continue to lead the revolution in the development of the Nigerian OTC markets by providing credible market structures to aggregate all trade data of its Dealing Members acting as liquidity providers to the various products on its platform, ensuring continuous information symmetry. Whilst FMDQ continues to lend its itself as a worthy and operationally excellent platform, serving as the point of integration between the domestic and international markets, it is expected that this laudable step paves the way and encourages the corporates to follow the FGN’s lead towards deepening the Nigerian debt capital market”.

The need to develop Nigeria’s bond market to bridge the prevailing long-term financing gaps, has been remarkably underscored by this symbolic listing on FMDQ, the DCM-focused OTC Exchange in Nigeria. By instituting requisite systems and infrastructure, this listing on FMDQ’s platform will attract and avail prospective investors the opportunity to buy and trade on the secondary market of a Nigerian securities exchange. Through the effective network effects provided by FMDQ’s Dealing Members, who invariably are responsible for circa 99% of the secondary market trading activity in the Nigerian fixed income market, FMDQ shall continue to innovate and improve its offerings to further enhance liquidity for the on-the-run FGN Eurobond.