IFC to issue $50m Naira-denominated bond for Nigeria's market

International Finance Corporation (IFC), a member of the World Bank Group, has unfolded plans to issue a $50 million local-currency (Naira) bond, an equivalent of N8 billion, to support the country's domestic capital market and increase access to local-currency finance in Nigeria.

The issue, dubbed 'Naija bond', will be the financial institution's first Naira-denominated bond and the first placement by a non-resident issuer in the country's domestic market.

IFC's Vice-President and Treasurer, Jingdong Hua, said that 'vibrant domestic capital markets are the foundation for lasting growth and in Africa, they can mobilise capital to close the financing gap for key sectors such as infrastructure and housing.

'The IFC Naija bond will be a milestone achievement as we continue to work with governments and local authorities to strengthen domestic capital markets in the region.

'It's five-year. We wanted to design the tenor as the first bond to appeal to the widest possible range of investors: from banks to insurance companies to pension funds. We certainly hope this transaction is just the start of many issues to come in the future.'

Hua explained that the proceeds from the bond sales would be used to finance the needs of its own clients.

'A lot of our SME (small and medium size enterprise) customers generate local currency revenue. We'd like to lend to them in local currency so they can really focus on growing their business, instead of worrying about foreign exchange volatility,' he stated

According to a statement from the IFC, 'Naija bond is targeted at investors like pension funds, insurers, asset managers and banks, that seek to diversify their portfolio, while investing in high-quality assets.'

It noted that IFC bonds are rated triple-A by Moody's Investors Service and Standard & Poor's, adding that proceeds from the bond will be used to support IFC's private sector development programme in the country.

The corporation's Country Manager for Nigeria, Solomon Adegbie-Quaynor, said: 'The IFC Naija bond will support the government's efforts to deepen domestic capital markets in Nigeria. It will help pave the way for other issuers in the domestic markets and make available funds that can be put to work in the local economy.'

IFC's portfolio to date in Nigeria is put at $1.1 billion, which is ranked as the largest country portfolio in Africa and the eighth-largest globally.

It could be recalled that in May 2012, IFC launched its Pan-African Domestic Medium-Term Note Programme, which focuses on Botswana, Ghana, Kenya, Namibia, Rwanda, South Africa, Uganda, and Zambia. It has also obtained approvals to issue local-currency bonds in Kenya.

Already, IFC had worked with Ghana, Zambia, and eight members of the West African Monetary Union to establish local-currency bond programmes, like in 2006 and 2009, when it issued bonds denominated in CFA francs.

The bonds issues of the corporation had been part of its regular programme of raising funds for private sector development and a way of supporting the development of domestic capital markets in various countries. As of June 30, 2012, IFC had outstanding bond issuances put at $45 billion in 11 currencies.

The IFC Naija bond is the result of a collaborative process among IFC, the Nigerian government and regulatory authorities, and market participants. Chapel Hill Advisory Partners Limited and Standard Chartered are lead managers of the transaction.