Nigerian Eurobond oversubscribed by 400% despite Trump’s threat

The Eurobond issued yesterday was oversubscribed four times, signaling deep investor confidence despite lingering geopolitical tension from Trump’s threat.

The dual-tranche offering, designed to raise external capital and diversify the nation’s funding sources, attracted over $9.1 billion, resulting in an oversubscription rate exceeding 400 percent. This demand allowed the Debt Management Office (DMO) to successfully price both the 10-year and 20-year tranches.

The 10-Year tranche saw seven times the demand, leading to an oversubscription of $4.9 billion (for an issued amount of $700 million), while the 20-year tranche saw its demand exceed $4.2 billion (for an issued amount of $1.5 billion).

The oversubscription is particularly notable as it came amidst a period of heightened market jitters stemming from US political developments, specifically the implied threat by President Donald Trump of military action in the country if its government doesn’t halt the killings of Christians by Islamist militants.

This led to the Eurobond secondary market experiencing huge selloffs on Monday and Tuesday.

Analysts had warned that such external pressures could dampen investor appetite, but the Nigerian sovereign paper proved irresistible to international fund managers.

“I sense that it will do well, regardless of the issues. The ongoing ‘fiscal reforms’ and credit rating improvements will support our outlook. Also, I am seeing some 9 percent -10 percent interest rate. Those yields are super attractive – especially when you contextualise them with recent Fed rate cuts,” AbdulRauf Bello, portfolio manager at Cowrywise, said.

The 10-year notes were priced to yield 8.75 percent, while the longer-dated 20-year notes secured a yield of 9.25 percent.

The revised maturity dates place the 10-year notes due in January 2036 and the 20-year notes due in January 2046. (BusinessDay)