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FG explores frontiers for financial advisers on Diaspora bond

By The Citizen
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The Federal Government is in search of an international bank and a local lender to act as financial advisers for a $100m Diaspora bond to be issued by the end of the year, the Debt Management Office (DMO) said on Wednesday.

The advisers will coordinate investor road shows and support the bond's registration with the United States and British authorities, the DMO said.

The DMO expects to offer a coupon of around 350 basis points above the five-year US treasury bond for the bond, which will have a five-year tenor.

Nigeria is the world's fifth-biggest destination for international remittances after China, India, the Philippines and Mexico, with five million Nigerians living abroad sending money back to relatives, according to the Western Union.

It stated that the Federal Government had increased the amount it was borrowing overseas to around 40 per cent of all debts over the next three to five years, from 12 per cent, seeking lower funding costs.

The government issued a $1bn Eurobond last month and planned to raise an additional N80bn ($505m) in global depository notes this year, the report stated.

Bids for the Diaspora bond adviser role would be due on September 26; Citibank and Deutsche Bank acted as advisers on the Eurobond, which was four times oversubscribed, it added.

Nigeria received $10bn in remittances from citizens living abroad last year, out of $40bn sent back into the continent in total, the Western Union said in June.

The establishment of the Nigerian sovereign bond in the International Capital Market has increased foreign investors' holding in the Federal Government securities by over 900 per cent from $500m to $5.11bn within the space of one year, according to figures from the DMO office.

The 900 per cent growth occurred between January and December 2012, it stated.

A recent report from the DMO office stated, 'Increase in the relative share of foreign investors' holdings in the FGN securities - while foreign investors accounted for near zero per cent of 2011, their share had increased to 19.52 per cent  as at the end of 2102.

'Significant reduction in government's cost of borrowing-fall in yields by about 400bps between August and December, 2012; growth and further diversification of the investor-base for FGN securities; and creation of more borrowing space for other domestic borrowers to access funds in the local market, which addresses the risk of crowding out the private sector.' - Punch.