The African Development Bank said it has issued its first Nigerian local currency bond in the capital market.

The bank said it successfully introduced and sold NGN 12.95 billion of a seven-year, semi-annual fixed rate notes, structured with a three-year grace period and preceding a four-year amortize on principal at 75 basis points below the government yield curve’s comparable reference point (Federal Government of Nigeria, Jan. 27, 2022) to price at 11.25 percent.

The amount raised through a diverse category of investors—including pension funds, asset managers, banks and insurance companies—is the largest ever issuance, and also the longest maturity note in its asset class to be introduced to the Nigerian market.

AfDB was advised on this transaction by Stanbic IBTC Capital (a member of the Standard Bank Group) and Rand Merchant Bank Nigeria, a wholly owned subsidiary of the FirstRand Group.
The AfDB’s medium-term note program is the first ever to be established by a supranational issuer in the Nigerian capital market.

The bond issuance came weeks after it received approval from Nigeria’s Securities and Exchange Commission in June to establish a 160 billion naira dominated Medium Term Note program that will be used as loan lend to financial and commercial institutions to help finance local small medium enterprise businesses and infrastructure projects in the country.

This bond is the third domestic bond issue by the bank in Africa, outside of South Africa and is part of AfDB’s Local Currency Initiative.

The bank previously issued two local currency bonds in Uganda in August 2012 and May 2013.

“The Nigerian Naira issuance confirms the AfDB’s commitment to launch more local currency bonds across the continent, with proceeds used to provide local currency loans to the Bank’s clients. This will enable us to better respond to client needs, particularly with respect to mitigating the foreign exchange risks posed by hard currency loans,” said Pierre Van Peteghem, African Development Bank Group treasurer.

Nigeria, Africa’s largest economy with a population of above 160 billion, is AfDB’s largest shareholder.

Van Peteghem added, “Issuances in the local markets allow the Bank to lend to its borrowers in local currencies thereby eliminating their currency risks; and to participate in the development of African capital markets by providing a new investment product to the local institutional investors.”