In a recent statement, Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, shared that the upcoming $500 million domestic FGN US dollar bond is expected to bolster external reserves and contribute to stabilizing the foreign exchange situation in Nigeria.
During a hybrid roadshow held in Lagos ahead of the bond’s anticipated opening on Monday, Edun emphasized the importance of dollar funding for maintaining exchange rate stability and supporting investments in the economy. He highlighted the Central Bank’s effective ‘willing buyer, willing seller’ approach, which has facilitated the influx of additional dollars into the economy.
Addressing the significance of the domestic issuance of US dollar bonds, Edun mentioned the positive impact on attracting various forms of investment, including portfolio investors, foreign direct investors, and multilateral organizations backing the government’s macroeconomic strategies.
Edun expressed optimism about the success of combined monetary and fiscal policies in attracting foreign portfolio investments and boosting foreign direct investments, particularly in sectors like oil and gas. The increase in foreign exchange reserves is expected to fortify the exchange rate, potentially curbing inflation and lowering interest rates, fostering opportunities for borrowing, investment, job creation, and poverty reduction.
According to data from the Central Bank of Nigeria, the country’s external reserves as of August 12 amounted to $36.62 billion, underscoring the importance of initiatives like the domestic bond in strengthening reserves.
Providing insights into the bond offering, Dr. Gbadebo Adenrele, Managing Director of Investment Banking at United Capital, the lead issuing house, revealed that the $500 million bond is open to both Nigerians, non-Nigerian residents, and the Nigerian diaspora. The bond features a five-year tenor with a minimum investment threshold of $10,000 to encourage wider participation.
Investors will receive repayment in US dollars, ensuring value preservation, while the bond will be listed on the FMDQ and the Nigerian Exchange Limited, enhancing its visibility in the market.