Barclays Capital is to advise the Nigerian government on its debut sale of a $500m eurobond while another 10 countries with emerging economies are preparing for similar auctions.
Nigeria has selected the investment banking arm of Barclays to counsel the Ministry of Finance, headed by a former Goldman Sachs banker, Olusegun Aganga, on all areas of the proposed sale from appointing the bookrunners to determining the final size of the eurobond.
It is an important win for Barclays Capital, which narrowly beat specialist financial adviser Newstate Partners to the mandate. Both parties were encouraged to find Nigerian partners. It is thought Newstate teamed up with First City Monument Bank but it is not clear yet who will partner Barclays Capital.
Mr Aganga said last month at an investor roadshow in London that there was a huge amount of investor interest in Nigeria which is Africa's most populous country and its third largest economy.
The size of the bond sale could be increased to accommodate the greater interest, he said. It is thought the appointment of bookrunners could push into next year, after Nigeria's general election in January.
Mr Aganga said that he wanted to set a "benchmark price" that would make it easier for domestic businesses to raise money with more confidence as corporate borrowing rates had declined substantially.
Nigeria, the latest in a line of African countries to try to raise finance from the global debt markets, wants to fund objectives such as its substantial $100bn infrastructure deficit.
Its appointment of Barclays Capital follows Morrocco's successful sale of €1bn 10-year bonds last week – its first eurobond since 2007. Senegal's Finance Minister said in June his country was looking to sell a $300m bond next year to finance road projects and Tanzania it also planning a eurobond sale within the next 12 months.
Countries with emerging economies are finding the global bond market conditions attractive because bonds are being issued at low yields which generate high interest from investors who are "chasing yield", looking to diversify their portfolios with investments that have the potential to improve. The investments are made comparatively even more attractive because the returns on fixed-income investments in developed economies are so low.
Other emerging countries preparing eurobond sales include Albania, Azerbaijan, Mongolia and Jordan, which has appointed JP Morgan, HSBC and an Arab Bank/Credit Suisse consortium to advise on a $500m eurobond.
For investment banks these emerging economies are a new and potentially lucrative source of fee revenue and bidding for such mandates will become more competitive.
Barclays Capital and Newstate Partners declined to comment.Reuse content