Issuance

Who has issued Eurobonds in Nigeria?

Who has issued Eurobonds in Africa?

Why are Eurobonds issued?

Eurobonds are largely used as a funding tool for issuers. Instead of borrowing from the banking system, issuers are able to borrow directly from capital market participants.

There a several advantages in doing so:

  • Borrowing from the public can potentially reduce borrowing costs.
  • It can allow for more flexibility in terms of the maximum amount borrowed, the tenor, the use of proceeds or the repayment structure.
  • Eurobond issuance could raise the public profile of the issuer. Eurobond issuance provides investors with an opportunity to assess the issuer’s investor relations, and corporate governance standards in particular, which subsequently boosts awareness of the issuer amongst the public.
  • Eurobonds are largely standardised products that are issued on a routine basis. For this reason capital markets can be easily and quickly tapped in the future.

One of the main disadvantages of Eurobonds  as a funding tool is for smaller issues. Access to capital markets is typically reserved for larger companies.

What are the proceeds of Eurobonds used for?

It is widely said that issuers of Eurobonds do not have to disclose what the borrowed funds will be used for. Bank loans generally require a clear usage of the proceeds in order for the bank to determine credit and repayment risk. Because issuers in Eurobond markets borrow funds from a substantial number of different investors (sometimes thousands), this requirement is less clear. Below the three main uses are listed:

  • Refinance of existing Eurobonds
  • General corporate use
  • Capital expenditures

For especially sovereign issuers, refinancing is a the main use of proceeds. This is where the proceeds of a newly issued Eurobond are used to repay a previously issued Eurobond.

What amount has been issued by Nigerian issuers?

Total: $20.743352 billion

Is there an issuance calendar for Eurobonds?

There is no calendar telling investors when Eurobonds are issued and by who. Eurobonds are issued at the issuer’s discretion. This differs from domestic debt issuance which follows a predefined calendar.

With the help of investment banks (“bookrunners”), an issuer usually visits investors prior to the issuance to get a feel of investor appetite and pricing (“roadshow”). The time from announcement of a roadshow and the actual issuance of Eurobonds usually takes 1-2 weeks. Issue size, the actual coupon rate and issue yield are only confirmed and publicised once the Eurobond is formally issued.  Investors are usually only provided limited guidance prior to the issue date.