Nigeria has closed Africa’s biggest Eurobond’s issuance this year, and might raise more

Earlier this week, Nigeria successfully issued three tranches of Eurobonds on the international capital markets, its first such operation since November 2018. While the country had planned to raise between $3bn and $6.2bn, the order book peaked at a whopping $12.2bn, enabling the government to settle for a healthy $4bn from foreign investors.

The issuance successfully attracted bids from Europe, the Americas and Asia and was also open to domestic investors. Nigeria now has an extra $4bn split into three tranches: a 7-year tenor Eurobond at 6.125% for $1.25bn, another 12-year tenor Eurobond at 7.375% for $1.5bn and finally a 30-year tenor Eurobond at 8.25% for $1.25bn.

While the rates secured by Nigeria are not as attractive as some of its neighbours (Côte d’Ivoire and Benin recently closed Eurobonds issuances at only 4.3% and 4.875%), the operation certainly confirm investors’ appetite for Nigerian debt.

Nigeria is rated B2 (negative) by Moody’s, B- (Stable) by S&P and B (Stable) by Fitch. The country is in the middle of a historic foreign exchange and currency crisis, so the influx of additional dollars is expected to help its central bank provide much-needed foreign exchange to the economy. While the proceeds from the Eurobonds are to be used to partly finance the 2021 deficit, an inflow of foreign exchange is also good to increase external reserves and help support the Naira’s exchange rate.

The country’s external liquid reserves have been back above the $35bn threshold since mid-September, a level not achieved since last February. While Nigeria has struggled to increase oil production, strong commodity prices still helped the country’s oil exports revenue hit a 3-year high in Q2 2021. Nigeria’s oil & gas exports currently represent 89% of the country’s total export revenues including 80% of crude oil and 8.5% for LNG.

The country now has the option of selling more debt: its issuance confirmed the willingness of investors to provide capital and possibly reach the maximum target of $6.2bn Nigeria had set. In an emailed response to Bloomberg this week, Debt Management Office Director General Patience Oniha said Nigeria might seek to raise the full $6.2bn from Eurobonds if the tenors and pricing are good.

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IsDB allocates $20 million for Togo’s rural electrification

During its 342nd period meeting under the chairmanship of H.E. Dr. Muhammad Al Jasser on Sunday, the Islamic Development Bank has approved $20.15 million for a rural electrification project based on mini solar power plants in Togo. In addition, the IsDB announced that its Lives and Livelihoods Fund provided $10.85m to improve the level of human development in Togo by delivering sustainable supply of electricity to the rural population of Togo. It benefits 372 schools, 22, 092 families, and 102 health centers. The Jeddah-based institution is a traditional partner of Togo’s electrification agenda. It has notably already released $49m in the form of loans to support projects in the north of the country, including the extension of the 161 kV high voltage network of the CEB from Dapaong to Mango.

Sun Africa is mobilising over $2 bn for Angola’s solar industry

Earlier this year, the consortium of Sun Africa, MCA Solar Angola and Hitachi ABB Power Grids broke ground on 370 MW of solar PV projects in Angola. These are split across seven different facilities now under-construction, including the 188.88 MWdc Biopioa solar plant and the 96.70 MWdc Benguela solar plant. These are developed under a $650m integrated solar project that sees Sun Africa acting as developer while the MCA Group is the EPC contractor and Hitachi ABB Power Grids the original equipment manufacturer. The scheme benefits from a €560m export credit from Sweden and is also financed by K-Sure of South Korea and the Development Bank of Southern Africa (DBSA). The facilities will be mostly supplied by Swedish contractors, from substations to steel frameworks, with Hitachi ABB Power Grids in Sweden delivering 50% of the Swedish scope of work. The rest will come from NEXTracker’s facility in Fremont (California) and Sun Africa’s facility in Miami (Florida). But Sun Africa took its commitment to Angola a step further this week with the signing of a memorandum of understanding for the development of Africa’s largest mini-grid and rural electrification project at a cost of $1.5bn. The MoU was signed between Angolan Minister of Energy and Water João Baptista Borges during a roundtable organized by the US Chamber of Commerce, in the presence of Angolan President João Lourenço. The project targets increased electrification rates in the provinces of Namibe, Cuando Cubango, Huila and Cunene via the development of mini-grid solar systems and the construction of new substations. The U.S. Exim Bank is expected to provide the bulk of financing. According to the International Energy Agency, less than half of Angola’s population had access to electricity in 2019. While the country has so far mostly relied on hydropower and thermal sources of energy, it also has a high solar resource potential, and its average annual global radiation is estimated at between 1370 and 2100 kWh/m2/year. With this resource, Angolan authorities believe they could install a solar power generation capacity of 55,000 MW. Details on the Benguela and Biopio solar PV facilities are available in the “Projects” section within your Hawilti+ research terminal.