The international Finance Corporation (IFC), a member of the World Bank Group, has revealed plans to issue a $50 million local-currency bond — 8 billion naira — to support the country’s domestic capital markets and increase access to local-currency finance in Nigeria.
The IFC Naija bond will be IFC’s first naira-denominated bond. It will also be the first placement by a nonresident issuer in the country’s domestic capital markets.
“Vibrant domestic capital markets are the foundation for lasting growth—and in Africa, they can mobilize capital to close the financing gap for key sectors such as infrastructure and housing,” said Jingdong Hua, IFC Vice President and Treasurer. “The IFC Naija bond will be a milestone achievement as we continue to work with governments and local authorities to strengthen domestic capital markets in the region.”
The IFC Naija bond is targeted at investors such as pension funds, insurers, asset managers, and banks who seek to diversify their portfolio while investing in high-quality assets. IFC bonds are rated triple-A by Moody’s Investors Service and Standard & Poor’s. Proceeds from the bond will be used to support IFC’s private sector development program.
Solomon Adegbie-Quaynor, IFC Country Manager for Nigeria, said: “The IFC Naija bond will support the government’s efforts to deepen domestic capital markets in Nigeria. It will help pave the way for other issuers in the domestic markets and makes available funds that can be put to work in the local economy.”
IFC’s committed portfolio in Nigeria stands at $1.1 billion, the largest country portfolio in Africa and the eighth-largest globally.
In May 2012, IFC launched its Pan-African Domestic Medium-Term Note Programme, which focuses on Botswana, Ghana, Kenya, Namibia, Rwanda, South Africa, Uganda, and Zambia. IFC has also obtained approvals to issue local-currency bonds in Kenya. Previously, IFC worked with Ghana, Zambia, and eight members of the West African Monetary Union to establish local-currency bond programs. In 2006 and 2009, IFC issued bonds denominated in CFA francs.
IFC issues bonds as part of its regular program of raising funds for private sector development, and to support the development of domestic capital markets. In many cases IFC is the first, or among the first, nonresident issuers. As of June 30, 2012, IFC had outstanding bond issuances totaling $45 billion in 11 currencies.
The IFC Naija bond is the result of a collaborative process among IFC, the Nigerian government and regulatory authorities, and market participants. Chapel Hill Advisory Partners Limited and Standard Chartered are lead managers of the transaction.