The Federal Government has identified pension funds and banks as key targets for its inaugural $500 million domestic FGN US dollar bond.
Details of the new securities were unveiled during a hybrid roadshow in Lagos, which was attended by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, the Director-General of the Debt Management Office (DMO), Ms. Patience Oniha, and other stakeholders involved in the issuance.
The minister emphasized that the bond is aimed at Nigerians living in the country, foreign residents, and Nigerians living abroad.
According to data from the National Pension Commission, Nigeria’s pension fund is valued at over N20 trillion, with a significant portion already invested in Federal Government securities.
Expressing optimism that the offer, tentatively scheduled to open on Monday, would be oversubscribed, Edun said, “If we can harness the savings of Nigerians, including those in the diaspora, and encourage them to invest in President Bola Tinubu’s macroeconomic reform agenda, we can grow the economy, make it more productive, and globally competitive.
“They have their savings, and they are the targets for this instrument. Likewise, Nigerians living in the country who have savings abroad should consider this an opportunity to bring their money back home.
Rather than keeping it abroad, they should invest in the Nigerian economy to create jobs. “This is just the first step, and it is a historic one.”
The minister also noted the challenges with concessional flows from multilateral organizations, stating that they are often negative.
“Funds that should be surplus and provide additional help to developing countries for financing development are instead counterproductive.
We must rely on domestic resource mobilization, build our own financial markets, and leverage our savings—this is exactly what this bond aims to achieve.
“It is important not just nationally, but also regionally, if not continentally.
Nigeria recently hosted the African caucus of finance ministers and central bank governors from the World Bank and the IMF. The main topics discussed were international financial architecture, the international capital markets, and rating systems that do not favor Africa.
These systems do not provide us with the financing we need for development. One area that Africa and West Africa are looking to for leadership is Nigeria,” he explained.
The Managing Director of Investment Banking at United Capital, Dr. Gbadebo Adenrele, revealed that the Central Bank of Nigeria (CBN) has approved banks and pension funds to participate in the bond offering.
“This bond qualifies as an instrument that pension funds can invest in. We all know that pension funds and banks have performed well.
The bonds are tax-exempt, just like other Federal Government securities. The CBN has also granted approval for banks to participate, which is part of the incentives,” Adenrele said. United Capital is the lead issuing house for the bonds.
Both Edun and Adenrele emphasized that the offering is an innovative move that will boost Nigeria’s capital market and set a precedent in the West African region and across the continent.
Adenrele stated, “This will pave the way for many sovereigns in the region and the broader African continent.
Many countries often follow Nigeria’s lead. This bond can also be used by institutions and investors as collateral for securing credit, thereby developing the local capital market.
This is truly impact investing, directed at critical sectors that will positively impact people’s lives.”
Meanwhile, the Director-General of the DMO, responding to questions about the participation of pension funds in the offering, said, “The investment guidelines permit pension funds to invest in Federal Government securities.
Those managing dollar-denominated assets typically invest in Eurobonds. Since Eurobonds are not available now, they can redirect those funds to this bond.”
However, the virtual proceedings of the hybrid event were momentarily disrupted by inappropriate content.
Online participants reported that the Zoom livestream was briefly interrupted by a man engaging in explicit behavior during the question-and-answer segment of the program.
