FG appoints German, US banks as bookrunners for $500m international bond

FG appoints German, US banks as bookrunners for $500m international bond

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Written by Odidison Omankhanlen with Agency Reports Thursday, 04 November 2010

THE Federal Government has picked Deutsche Bank and Citigroup as bookrunners for its N75 billion ($500) million debut international bond.
A bookrunner is the primary underwriter in debt and equity deals. The book runner works with other firms who will also take part in the deal, allowing for the sharing of risks.
The Finance Minister, Olusegun Aganga, who disclosed this in Abuja on Wednesday, said the two foreign renowned banks were chosen after exhaustive considerations, stressing that the government had implicit confidence that they would meet the expectations.
“It was keenly contested, but in the end these two, Deutsche Bank and Citigroup, emerged the two bookrunners One very strong house in Europe and one very strong house in the United States, that is how we split it,” he said.
Only last month, the Federal Government named London-based Barclays Capital and FBN Capital, a subsidiary of Nigeria’s First Bank, as its financial advisers for the bond.
The government first announced plans to borrow in the international bond market in September 2008, but soon put the issue on hold, citing adverse market conditions. The government plans to issue the 10-year bond before the end of the year to set a benchmark in the international capital markets that will allow state governments and companies to follow suit.
Improving perceptions of African risk and demand for emerging assets as investors seek better returns than they can get in more established markets have since pushed yields to all-time lows on international bonds by other African borrowers.
The Minister of Finance had said last month that he expected the yield on the planned bond to be lower than nearby Ghana’s Eurobond, which traded at a yield of 5.976 percent yesterday, not far off its lowest since issue in 2007.
He pointed out that he expects appetite for the bond to be stron, adding that there is enough interest for the country to be able to raise $1 billion but that it is not tempted to go above the planned $500 million for now.