Calm Markets Welcome Abuja’s Return
Global desks barely reacted to recent geopolitical noise as Nigeria sold $2.25 billion in Eurobonds on November 5, traders in Lagos and London said. The muted response to foreign policy rhetoric, including comments from former US President Donald Trump, highlighted investors’ renewed tolerance for African risk.
The Finance Minister told reporters the proceeds will be used to plug Nigeria’s 2024 budget deficit and refinance securities maturing this month. The quiet book-building process, which closed with two times oversubscription, surprised analysts who had feared higher yields following the latest Federal Reserve rate pause.
Maturity and Price Signal Investor Appetite
The issue was split into a 10-year tranche at 9.125% and a 20-year tranche at 9.625%. Global coordinator bankers described the curve as Nigeria’s deepest since its 2018 issuance. By New York’s close, both bonds had tightened by 35 basis points in the secondary market.
“Yield levels remain high compared to pre-pandemic lows, but they now fall within the mandate of many crossover funds,” a strategist said. The relative scarcity of high-grade African paper since the 2022 hiatus amplified demand, he added.
Implications for Congo-Brazzaville and CEMAC
Brazzaville, which reopened its own access to dollar capital markets in July after a 20-year break, is watching closely. Treasury officials indicate Congo’s $400 million Eurobond, issued at 9.75% for seven years, now trades around 102 cents on the dollar, confirming President Denis Sassou N’Guesso’s prudent fiscal stance.
A senior Economy Ministry official states Nigeria’s success “confirms the window remains open for well-prepared issuers in Central Africa.” He cited the government’s oil-backed revenue stabilization fund and recent IMF program reviews as reasons international investors keep Congo in mind.
Regional Debt Wave Gains Momentum
Kenya raised $1.5 billion in a reopening last month, while Angola issued $750 million. These three deals, with Nigeria’s, have brought Africa’s hard-currency issuance since the start of the year to over $7 billion, data shows. This is still below the 2018 record but marks a clear thaw after an 18-month drought.
For many sovereigns, the calculation is simple: secure funding before US monetary policy turns restrictive again. “Lower G7 inflation gives treasuries a breather,” an analyst noted. Cameroon and Gabon are reportedly preparing syndicated loans, preferring private placements to broader benchmarks for now.
Focus on Reforms and Debt Sustainability
Despite the upbeat tone, rating agencies are watching closely. Moody’s maintained Nigeria at B3 with a stable outlook, citing the administration’s commitment to phasing out gasoline subsidies and unifying multiple exchange rates. Progress on these fronts, observers say, will determine if borrowing costs fall further.
Congo-Brazzaville faces a similar narrative. Parliament is debating a medium-term debt law capping commercial external debt at 35% of GDP. Economists argue anchoring liabilities is crucial to preserving the country’s development gains and attracting diversified investment beyond oil.
The CEMAC central bank, BEAC, forecasts regional growth of 3.6% this year, supported by construction and digital services. Lower risk premiums could accelerate projects like the Pointe-Noire Special Economic Zone, where officials envision public-private partnerships rather than sovereign guarantees.
“Eurobonds are a tool, not a strategy,” a chief economist reminds. He urges policymakers to pair external financing with domestic resource mobilization, including digitized tax collection, to reduce vulnerability to shifts in global liquidity.