Stanbic Named Adviser On $300bn Diaspora Bond

The federal government has started the process of raising $300 million through a debut Diaspora Bond as it has asked international investment bank, Goldman Sachs and the Nigerian unit of South Africa’s Standard Bank to advise it on the proposed sale.

Sale of the Diaspora Bond is to come after the completion of the $1 billion Eurobond planned for March this year. Diaspora Bonds are a form of government debt that targets members of the national community abroad.

The federal government under former President Goodluck Jonathan had announced plans to sell Diaspora Bond in 2013 to raise between $100 million to $300 million. Goldman Sachs and Stanbic were due to manage the sale at the time, but the government then did not appoint any bookrunners before an election in 2015 that brought President Muhammadu Buhari to power.

The House of Representatives last year approved the request of the federal government to increase the amount to be raised through the Diaspora bond from the international market from $100 million to $300 million.

Nigeria’s finance minister, Kemi Adeosun speaking on the Diaspora Bond recentky,  said, “We are keen for that to take off. We are doing the Eurobond at the moment. The Eurobond is for January and as soon as that is completed, the next one is the Diaspora Bond.

“We are very excited that the National Assembly has approved the Diaspora Bond. We believe Nigerians abroad want to support development in Nigeria. We are hoping that the Diaspora Bond will be rolled out by March.”

Nigeria is in its first recession in 25 years and needs to find money to make up for shortfalls in its budget. Low prices for crude and militant attacks in its oil-producing heartland, the Niger Delta, have slashed its revenues.

The government plans to borrow up to $10 billion, with about half of that coming from foreign sources as it seeks to boost overseas loans to plug funding gaps for its expansionary 2017 budget of over N7 trillion.

In December, the government appointed Citigroup, Standard Chartered Bank and Stanbic IBTC Bank to manage the $1 billion Eurobond sale, which it began marketing this January.

Remittances are the second-largest source of foreign exchange receipts in Nigeria, after oil revenues. Citizens living abroad send at least $21 billion home annually.

Nigeria is the world’s fifth-biggest destination for international remittances after China, India, the Philippines and Mexico, with five million Nigerians living abroad sending money back to relatives, according to Western Union.