Ecobank MD Applauds Nigeria’s Eurobond Issuance Plan

Ecobank Nigeria’s Managing Director, Mr. Patrick Akinwuntan has expressed support for the Federal Government of Nigeria’s plan for a Eurobond issuance in the International Capital Market, describing the multi-billion dollar offering as a step in the right direction.

He said that that the fundamentals and potentials of Nigeria’s economy are strong, with capacity to meet its debt obligations.

Mr. Akinwuntan made the declaration while assessing the global market following Nigeria’s announcement of the Eurobond offering.

In an interview on Arise TV in Lagos, he said that the Nigerian economy was showing strong trends owing to investments in infrastructure such as road and rail transportation which is giving a lot of positive impact to the overall economy adding that the private sector is also making remarkable improvement in power sector, telecommunications and information technology.

According to him, “You look at the fundamentals, what is the story of this economy? You look at Nigeria, the fundamentals are strong, coming from the lessons learnt in being a mono product economy which was dependent on oil. We have since embarked on the journey of diversification and we are beginning to show early fruits. Exports are improving, Africa Continental Free Trade Area (AfCFTA) provides the opportunity to expand that even further. So, you look at the fundamentals, look at the openness of the economy, the transparency of reporting and look at the opportunities to enhance real growth, output, capacity improvements and stability of policies. All these are factors to look at with a view of participating in the economy like that of Nigeria.”

The bank chief observed that international borrowing will allow Nigeria as a country to access more foreign currencies, deepen external reserve, allows more confidence in the medium-term planning in the private sector, adding that it allows a bench mark to be established in terms of how funding and investment are priced within the local economy. “It also gives more rooms for the local economy to be able to breathe a bit more because when the country takes on Euro bond that portion is reduced from local country financing or public sector debt within the country. All these factors play strongly to the benefit of the private sector and the entire economy at large”, he explained.

NIGERIA’S FINANCE MINISTER ZAINAB AHMED

He continued: “In the last two quarters, we have seen the global market rebounding from the very deep end of the COVID-19 that plagued 2020. We have seen, since the arrival of vaccines, the gradual opening of the global economy such that there is much more optimism now in the market because we have learnt that shutting down the economy is not the best way to handle an epidemic and we have seen support from sovereigns ensuring that there is steady growth within the various economies; supply chain has opened and we have seen in sub-Sahara Africa renewed interest in the Eurobond market in the international debt market; we have seen Benin Republic, Ghana, Cote d’Ivoire and Kenya all are approaching the market with significant success. Over subscription in each of them ranges from 200% to 300% and an all high in Kenya close to 600% or six times over subscription. This is a positive period for major economies like Nigeria, which is the lead economy in Africa, to take advantage and invite the global community to hear our story, invest in us and get good returns.”

Citing Ecobank’s $300 million Eurobond offer earlier in the year which was over-subscribed by 300 per cent, Mr. Akinwuntan advised those approaching international debt market to have clarity of purpose and state clearly their strengths and weaknesses. “We are the first banking entity in Africa to do that in 2021 and it comes from our long-term planning in the economy of Africa; we are the pan African bank and when we look at Africa, Nigeria is a major player. Quickly we understood that arising from a scenario of pandemic and all-time lows of 2020 is time to look at the brighter side and we stepped out for the $300m US Eurobond offer which met positive response from investors across the globe within the country. We attracted more than 3 times in subscription. But we kept to the book of doing $300m because it is based on our plan in participating in positioning Nigeria, as the leading export country in the AFCTCA environment in the continent and giving our unique position as the Pan African bank, it was very clear to us and the market responded positively. Our experience also tells us that, what is critical is to have clarity on your strength, be very frank about your weakness or the areas of concern and how you intend to handle that positively”, he concluded.

Nigeria’s Minister of Finance, Budget & Planning Zainab  Shamsuna Ahmed, recently announced plans by the country to raise about $3 billion selling Eurobonds next month, having received approval to raise $6.1 billion from overseas.

Mrs. Ahmed said in a Bloomberg TV interview that the government was working towards reducing its debt-service burden by increasing revenue, restructuring its debt portfolio through the conversion of expensive short-term notes into longer tenors and also reducing its overall borrowing. The target, she explained, is to triple revenues from about 8% of GDP to 15%, and also grow the economy by 7%.

Proceeds from the Eurobond issuance is expected to help the government finance projects planned in the 2021 budget and shore up foreign-exchange reserves, which has come under pressure from lower oil prices and production.

 

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