FG Shops for Co-Arrangers for N80Bn Note Issue

Federal government is shopping for an international bank and a local lender to act as co-arrangers for N80 billion depository note to be issued this year, according to the Debt Management Office (DMO).

The DMO said yesterday in a notice that it had appointed a sole depository bank and an arranger for the offering, but did not name them.

The arranger will be responsible for advising Nigeria as to the type of facilities it requires and then negotiating the broad terms of those facilities while the co-arranger is expected to find more lenders to participate in the facility.

However, Reuters cited a source at the debt office saying that Nigeria had mandated Citibank to act as the depository bank.

According to the notice, bids for co-arrangers are due on October 3. Depository notes are usually used for short-term investment of funds in various currencies. 

Their advantages include flexibility (maturity between 14 and 365 days) and yield reflecting the current money market development at the time of negotiating a deal.

Nigeria is increasing the amount it borrows from overseas to around 40 percent of all debt over the next three to five years, from 12 percent, seeking lower funding costs.

The DMO in May said it will issue N80 billion in global depository notes this year, after a $1 billion eurobond, to deepen its footprint in international debt markets.

Citibank and Deutsche Bank acted as advisers on the $1 billion eurobond issued in July, which was four times oversubscribed. Nigeria also plans to issue $100 million in diaspora bonds this year and is seeking advisers. The DMO said the depository note will be documented under U.S. rules and listed in Europe.