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Fitch rating punches Nigeria’s $300m diaspora bond as Dabiri-Erewa deepens drive

The on the spot designation of the floated Nigeria’s $300m Diaspora bond of ‘B+(EXP)’ by Fitch Ratings has been seen as a big blow by industry experts.

This is as the driver of the bond, and Senior Special Assistant to the President of Diapora Affairs, Mrs. Abike Dabiri-Erewa has stepped up campaign for Nigerians and the international investors to buy in.

The rating according to experts is coming at a time there has been a marked improvement in Nigeria’s foreign exchange market, the external sector and the macro-economic fundamentals.

Analysts say the indication of the grade indicates that the relative stability in the foreign exchange market with reversal of the slide in gross domestic products, GDP, did not reflect in the expectations for the bond offer.

Business Hilights recalls that earlier in the year and on January 24, 2017 to be precise, Fitch affirmed Nigeria’s long-term foreign-currency IDR at ‘B+’ and revised the outlook to negative from stable. The long-term local-currency IDR was also ‘B+’ with a negative outlook, all reflecting the trepid foreign exchange market and sustained recessionary pressures. The agency said the assignment of the final rating is contingent on the receipt of final documents materially conforming to information it already reviewed.

The international rating agency also noted that the expected rating is in line with Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) of ‘B+’. “The Outlook on the IDR is Negative. The rating is sensitive to changes in Nigeria’s Long-Term Foreign-Currency IDR. On January 24, 2017, Fitch affirmed Nigeria’s Long-Term Foreign-Currency IDR at ‘B+’ and revised the Outlook to Negative. The Long-Term Local-Currency IDR was also affirmed at ‘B+’ with a Negative Outlook,” the agency stated.

The Debt Management Office (DMO) last week said it will commence a ten-day roadshow in June in the United States, UK and Switzerland, for the country’s first diaspora bond of $300 million.

The roadshow kick-started on Tuesday with investment meetings in Britain while Switzerland and the United States follows.

The federal agency also noted that Bank of America, Merrill Lynch and Standard Bank of South Africa are joint lead managers for the sale.

The debt office had already filed a registration statement for the bonds with the U.S. Securities and Exchange Commission, adding that an application would be made for the bonds to be admitted to the official list of the UK Listing Authority and the London Stock Exchange to ensure that the bonds are traded on the London Stock Exchange’s regulated market.

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