United Capital Group, Nigeria’s premier financial services institution, has solidified its reputation as a leader in the capital markets by spearheading the issuance of the Federal Government’s first-ever Domestic US Dollar Bond.
The bond, which raised over $900 million with an impressive 180 percent subscription rate, marks a historic milestone for Nigeria as the first domestic USD-denominated bond in the country.
The strong demand for the bond reflects investor confidence in Nigeria’s economic potential and United Capital’s ability to drive innovative financial solutions even in challenging market conditions.
According to the Group, the proceeds from the bond will be directed towards critical infrastructural projects aimed at fostering long-term economic development in the country.
Commenting on the success of the issuance, Dr. Gbadebo Adenrele, Managing Director of Investment Banking at United Capital, described it as a groundbreaking moment for Nigeria’s capital market.
He noted, “This transaction establishes a foundation for more significant capital raises by the Nigerian Government and other African entities. The success of the Domestic FGN US Dollar bond highlights investor confidence in Nigeria’s economic trajectory and our ability to offer creative financial solutions.”
Peter Ashade, Group CEO of United Capital, emphasized the firm’s pivotal role in transforming Africa’s financial landscape. “The issuance of this bond is a major achievement not only for Nigeria but also for United Capital,” Ashade stated. “By providing access to innovative investment opportunities, we are empowering investors and contributing to the growth of Nigeria’s economy.”
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United Capital acted as the Lead Issuing House and Coordinator for the bond issuance, with the Africa Finance Corporation serving as the Global Coordinator. Other participants included Meristem Capital Limited, Stanbic IBTC Capital Limited, and Vetiva Advisory Services Limited, which acted as Issuing Houses.
Financial advisory services were provided by Constant Capital Markets & Securities Limited and Iron Global Markets Limited, while Olaniwun Ajayi LP and G. Elias served as Solicitors. Greenwich Trustees Limited was the Trustee for the bond.
This landmark issuance offers a 9.75 percent yield, with interest paid semi-annually over five years, and garnered interest from a diverse group of investors, including Nigerians, non-Nigerians residing in the country, Nigerians in the diaspora, and institutional investors.
The bond will be listed on the Nigerian Exchange Limited (NGX) and FMDQ Securities Exchange Limited (FMDQ Exchange). The success of this issuance, the first under the Domestic FGN US Dollar Bond program, is expected to boost Nigeria’s capital market and provide funding for key sectors of the economy.
While the transaction was widely praised for attracting significant domestic and international interest, it has also sparked concerns.
The International Monetary Fund (IMF) previously raised concerns about the potential risks of issuing foreign currency bonds domestically.
The IMF noted that such bonds expose the country to exchange rate risks, especially in light of the continued depreciation of the naira. Nigeria’s Director-General of the Debt Management Office (DMO), Patience Oniha, addressed these concerns by emphasizing that the bond’s success showcases the strength of Nigeria’s domestic market in handling foreign currency issues while boosting investor confidence.
Nigeria’s decision to issue a domestic bond in U.S. dollars instead of the local naira was driven by the country’s chronic foreign exchange shortages and the continued depreciation of the naira.
By opting for a dollar-denominated bond, the government aimed to attract investors seeking more stability. However, the IMF cautioned that this approach could increase the cost of debt for the country and pressure its foreign reserves.
Despite the risks, investors were eager to subscribe to the bond. The 9.75 percent yield offered a more stable alternative to local naira bonds, which, though offering higher returns at around 19.5 percent, carry significant risks due to inflation nearing 25 percent and monetary instability.
The bond also attracted international investors seeking higher returns compared to those available in more developed economies.
In addition to the domestic dollar bond, United Capital Group has continued to strengthen its reputation in Africa’s financial landscape through other achievements, including the listing of Transcorp Power Plc on the Nigerian Exchange Limited and the issuance of Sierra Leone’s first local currency corporate bond.
These milestones, along with its leadership in the Domestic FGN US Dollar bond, reinforce United Capital’s capacity to lead major capital market activities across the continent.
This latest bond issuance provides a win for Nigeria’s financial market, attracting significant investment, but the long-term implications for the economy and the naira remain to be seen.
Nevertheless, United Capital’s role in driving this innovation underscores its commitment to advancing Africa’s financial markets through strategic capital mobilization.
About United Capital Group
United Capital Group is a leading financial services institution providing a wide array of services, including Investment Banking, Asset Management, Securities Trading, Wealth Management, Consumer Finance, Trusteeship, and Microfinance Banking. The Group is dedicated to offering innovative solutions that empower governments, companies, and individuals across Africa.
