The Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture has said that the nature of the oversubscription of the $2bn Eurobond confirms the coupon offered was beyond market offers.
The President of NACCIMA, Mr. Dele Oye, disclosed this in a report tagged, ‘Options for Economic Reform and Consequences for The Medium-Term Expenditure Framework for 2025-2027, NACCIMA New Year message to members and Nigerians’ obtained by The PUNCH.
Oye, while congratulating the financial team for a successful outing, stated that the offer was received with mixed feelings.
“The successful Eurobond offer was received with mixed feelings. We congratulate the financial team on a successful outing. However, the nature of over-subscription confirms the coupon offered was beyond market offers,” Oye said.
The PUNCH reported last month that Nigeria returned to the international capital market for the first time in over two years, issuing Eurobonds to bridge its growing fiscal deficit.
Nigeria issued a dual-tranche Eurobond offering under its Global Medium Term Note Programme to finance the country’s 2024 fiscal deficit. The issuance was oversubscribed in excess of $9bn; however, the federal government eventually took just $2.2bn across both bonds. The FG sold $700m worth of the 6.5-year Eurobond maturing in 2031 at a coupon rate of 9.625 per cent and $1.5bn of the 10-year tenure at 10.375 per cent.
This marks Nigeria’s first Eurobond issuance since March 2022, signalling a renewed effort to address the country’s fiscal challenges.
Speaking further, Oye advised that there is a need to consider a hybrid offer that allows a Dutch auction that mops up the best offers at each coupon level.
“Perhaps we need to consider a hybrid offer that allows a Dutch auction that mops up the best offers at each coupon level. The successful bidders made instant profits overnight on the offer,” he said.
According to him, the government should be looking to reduce financing costs on an aggressive basis where possible.
“Because, while the improved liquidity gives the government access to international financial markets, they do not guarantee long-term economic stability. Relying heavily on foreign borrowing may expose the country to external shocks and currency fluctuations,” he advised.
Oye mentioned that the introduction of public sector expenditure guidance at all government levels for the purchase of locally produced goods and services will reduce pressure on foreign exchange demand by government agencies and their contractors.
He stressed that investment in public infrastructure should result in the utilisation of more locally sourced inputs, higher investment in local infrastructure, and improved local productive capacity.
The NACCIMA president mentioned that Nigeria needs a coordinated approach to delivering the latest technologies and digital infrastructure to facilitate the delivery of social services, public health, education, and digital infrastructure.
He highlighted the need for the government to introduce reforms and policies to facilitate, attract, and retain private sector investment in digital education and modern skills acquisition, “technical skills education for our teaming youth.”
Oye said that many employers are unable to find adequately skilled workers in many industries.
He advised the government on the need to undertake a rigorous review of its current size and expenditure to identify and eliminate wasteful spending, adding that efficient allocation of existing resources can help reduce excessive borrowing.
“Countries like Argentina have made political choices to eliminate recurrent budget deficits. The Nigerian budget for elected and unelected politicians can be adjusted. The size and number of government-funded agencies can be reduced, and taxes should be further reduced, which will attract greater private sector investment,” he advised.
