DMO Lists its Inaugural Diaspora Bond, latest Eurobond issues on FMDQ

The Federal Republic of Nigeria (FRN), through the Debt Management Office (DMO), pioneered another first in the Nigerian debt capital markets (DCM), as it marked the official listing of the inaugural Diaspora Bond on FMDQ OTC Securities Exchange (FMDQ or the OTC Exchange) yesterday, Thursday, December 21, 2017. The day also celebrated the official listing of the latest Eurobond issues by the FRN – US$1,500,000,000.00 6.500% Notes due 2027 and US$1,500,000,000.00 7.625% Notes due 2047 under its US$4,500,000,000.00 Global Medium-Term Note Programme Eurobonds – on the OTC Exchange. The FRN Diaspora Bond – US$300,000,000.00 5.625% Diaspora Bond due 2022 – issued in June 2017, along with the two (2) tranches of the FRN Eurobonds, were listed on FMDQ to promote, among others, visibility for the issues and financial inclusion. These listings of foreign currency-denominated debt securities by the FRN, show the government’s unrelenting commitment to supporting the growth and development of the nation’s DCM towards economic development sustainability. In the first quarter of 2017, the FRN made history in the nation, when the FRN Eurobond was listed for the first time ever domestically. Following a series of strategic engagements between the DMO and FMDQ, and other stakeholders on the importance of listing the sovereign’s Eurobonds domestically, the DMO achieved this most significant accomplishment when it listed the $1.00bn Eurobond on FMDQ in March 2017. Less than a year later, the DMO, on behalf of the FRN, is again making history through the issuance and subsequent listing of the FRN Diaspora Bond. To commemorate these remarkable achievements, the OTC Exchange hosted the Federal Government of Nigeria, represented by the Director-General of the DMO, Ms. Patience Oniha, along with key representatives from the DMO to a most impressive and memorable Ceremony. Also present at the Ceremony were key representatives from Stanbic IBTC Capital Limited, the sponsor of the issue and Registration Member (Listings) of FMDQ and representatives from Bank of America Merrill Lynch, Standard Bank of South Africa PLC, FBN Merchant Bank Limited, United Capital PLC, Udo Udoma & Belo-Osagie, Banwo & Ighodalo, amongst others. Welcoming the guests to the Ceremony, Ms. Tumi Sekoni, Vice President, Business Development of FMDQ, congratulated the issuer and sponsor of the issue on this critical milestone, commending the DMO for another successful outing by the FRN in the international markets. She highlighted that the FRN, via its Diaspora Bond, provided the opportunity for Nigerians in the international markets (and those in the domestic market with foreign capital) to contribute to the development of the Nigerian DCM and by extension, the economy. She commented that listing the bonds on FMDQ would rightly position the nation to continue to maximise its potential via the Nigerian DCM. She reiterated FMDQ’s commitment to remain unyielding in its support for the development of the Nigerian DCM through its highly efficient Listings/Quotations service.

Ms. Patience Oniha, Director-General of the DMO, during the issuer’s special address, stated that, “the listings will increase number and range of securities available in the domestic capital markets, thereby deepening the market and promoting financial inclusion. She also stated that, “this history will give more visibility to the domestic debt capital markets, which will be beneficial for attracting capital from local and foreign investors. Furthermore, in the specific case of the Eurobond, because it is a sovereign security, the information it will provide such as coupon, yield and tenor will serve as benchmarks for corporates who intend to issue Eurobonds in the international capital markets.” Mr. Yinka Sanni, Chief Executive Officer, Stanbic IBTC Holdings PLC, during his address, said that “by proceeding to list these instruments on the domestic exchanges, the DMO once again has paved the way for corporate and bank issuers to follow suit, thereby adding to the depth and breadth of the domestic capital markets. We thereby applaud the DMO for this initiative.” The Listing Ceremony, in line with FMDQ’s tradition, was marked with memorable highlights which included, amongst other activities, the unveiling of the special symbol and scroll; the signing of the FMDQ Bond Listing Register and presentation of the FMDQ Bond Listing Certificate; and the special autograph impressions by the issuer.

Mr. Bola Onadele. Koko, Managing Director/CEO of FMDQ, whilst giving the closing remarks, applauded the issuer for another remarkable job well done. He commented, “this is another highly commendable step by the DMO towards deepening the domestic debt capital markets. The DMO continues to set the pace for key development in the Nigerian DCM. The listing of foreign currency-denominated debt securities by the FRN paves the way for the issuance and domestic listing of Nigerian corporate Eurobonds. It also lights up the vision for the issuance of foreign currency-denominated debt locally”.

Kelvin Emmanuel

About Kelvin Emmanuel

The Oil producing Angola in the Southern part of Africa faces what Nigeria faced 12months ago; a distortion in its exchange rate with a difference between the official markets and the parallel black markets. One dollar through the official window buys you 166 kwanza, while one dollar through the black market buys you 400 kwanza. Nigeria faced the same challenge 12months ago, when the distortion between the official and black markets was as much as the official markets trading at 306 with the parallel market ranging from 450 through to 510. The Central Bank Governor of Angola, Jose de Massano Junior announced in Luanda “We will stop having a fixed foreign exchange, we will adopt a floating regime of foreign exchange”. Angola faces exactly the same challenges and has been applying the exact same responses to an exchange rate crisis like using its foreign reserves that was sitting at $26bn to defend the currency kwanza, with no success so far, even though the external reserves has dropped to $14bn. Angola relies on Oil receipts for 80% of its government revenue, 90% of its inflow and 50% of its GDP. Angola is a $194bn economy that has been growing at an average of 10% on the back of rising oil prices since 2002 when its 27 year old civil war that started in 1975 ended. The state national oil company Sonangol reports that it produces up to 1.8m barrels of crude oil daily, however the government that until now has being led by the family dynasty Jose Eduardo dos Santos until recently when succession saw power transferred to Joao Lourenco, reports that the oil price rout in 2015/2016 that saw prices drop to as low as $28 per barrel caused ripples across the economic structures of the government, upsetting government revenues, its ability to fund its budget, capital project funding, foreign direct investments into the economy as a result of a currency crisis that was driven by the widening of gap between the official and street window of the kwanza, that until now has been pegged in a fixed exchange rate regime to the US Dollar.