Bloomberg News

Nigerian Eurobonds Rise to Record on Growth, Reserve Increases

June 22, 2011

June 22 (Bloomberg) -- Nigeria’s dollar bonds climbed to a record on speculation that Africa’s most populous country will continue to experience growth as high oil prices, rising foreign reserves and recent elections spur investor confidence.

The 6.75 percent Eurobonds of Africa’s biggest oil producer due 2021 rose 0.1 percent to 104.981 cents on the dollar, the highest level since the debt was issued in January, lowering the yield two basis points, or 0.02 percentage point, to 6.056 percent as of 12:02 p.m. in London, according to data compiled by Bloomberg. The $500 million of bonds are Nigeria’s only international notes.

“There’s just not a lot of supply and with oil prices high and the election having gone better than expected,” investors “are looking for yield,” Rachel Ziemba, a senior analyst at Roubini Global Economics in London, said by phone.

Nigeria’s foreign reserves have climbed 3.8 percent this month to $33.3 billion as of June 20, according to data from the Central Bank of Nigeria in Abuja. Bonny Light oil has risen 18 percent this year. President Goodluck Jonathan, who was returned to power in April elections, rejected spending proposals by the legislature and slashed almost 500 billion naira ($3.2 billion) of spending plans adopted two months earlier in the final 4.5 trillion-naira budget passed May 25.

“The high oil price bodes well for Nigeria’s petroleum industry,” Renaissance Capital analysts, led by London-based Charles Robertson, wrote in a research report today. The smaller budget “implies that spending, particularly on imports, will slow and pressure on reserves will ease.”

The West African nation’s economic growth will rise to 7.8 percent in 2012, compared with 7.6 percent this year, according to Renaissance Capital estimates.

--Editors: Ana Monteiro, Alex Nicholson

To contact the reporter on this story: Chris Kay in London at ckay5@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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