Olaseni Durojaiye

The Bond

In announcing the $300 million Diaspora bond penultimate week, the Debt Management Office (DMO) had said it would raise the funds from Nigerians in the Diaspora to finance capital projects and provide an opportunity for them to participate in the development of the country. As part of measures to fund capital expenditure, the Federal Government had in February announced its offering of $1 billion euro bond under its newly-established $1 billion Global Medium Term Note programme. The $1 billion euro bond, which would mature on February 16, 2032, was eight times oversubscribed in the international market at an interest rate of 7.8 per cent with orders in excess of $7.8 billion.

The DMO also announced the Bank of America Merrill Lynch and The Standard Bank of South Africa Limited as the international joint lead managers and First Bank Nigeria Limited and United Bank for Nigeria Plc. The office noted that the bonds would be direct general obligations of Nigeria and will be denominated in U.S. dollars.

The DMO Director General, Dr. Abraham Nwankwo, explained in a statement that the Diaspora bond, was targeted principally at Nigerians abroad, to provide them with the opportunity to contribute to national development.

According to Nwankwo, the bond was structured as a retail instrument to appeal to a wide range of investors and was offered through private banks and wealth managers, rather than institutional investors, which normally deal in large volume transactions.

He enthused that the Diaspora bond had opened a new source of financing for the government for funding projects for the development of the country.

“This new window further enhances funding liquidity and flexibility of the Nigerian economy, which are necessary characteristics as the country gathers momentum towards the attainment of advanced economy status,” he explained.

Reacting to the successful outing, the Minister of Finance, Mrs. Kemi Adeosun, said: “To have received the approval of the U.S. SEC was indicative that the highest level of transparency and accountability Buhari

in the economic process has been attained.”

Adeosun explained that the bond should positively impact the country’s credit rating, transparency rating and financial market development index rating.

“The Diaspora Bond is the first bond issued by an African sovereign registered with both the U.S. SEC and the United Kingdom Listing Authority

Barely a year after the management of the Nigerian Breweries rolled out the drums to celebrate its partnership with five European clubs – Arsenal, Manchester City, Juventus, Real Madrid, and Paris Saint-Germain – and a national partnership with the Nigerian Professional Football League, the company has announced a fresh partnership with FC Barcelona as the club’s official supporter in Nigeria. Just as patrons of the brand were relishing the import of the news, promoters of the brand announced its novel initiative to bring together music and football through what it tagged“Star Music The Fusion”. For those who had followed the history of the brand, again this was not really news; Star Lager has over the years been a pioneer of ground breaking platforms, including Star Music Trek, Star Mega Jam, Star Super fans Show and Star Quest.

With the new initiative, the brand is promoting six teams of football legends, music artistes and DJs, competing in a series of music and football concerts. The novel platform has since begun to enthusiastically engage music and football fans with series of concerts, (UKLA) and targeted at retail investors,” she stressed.

Analysts

The success and the speed with which the bond was oversubscribed notwithstanding, the bond have continued to draw opinions from analysts. While the general opinion agreed that the cost was good and the oversubscription was a show online and offline activities to pick a winning team.

Sponsorship of sport and entertainment activities has gained prominence over other platforms in recent times because of the huge followership they command. To this end, leading global brands are daily using the two platforms as tools to connect with more consumers. From Coca Cola to Adidas, Nike to MasterCard, sports and entertainment have remained permanent tools for positioning.

With the partnership, Star lager beer will now possess the right to promote its connection with Barcelona fans and keenly enhance visibility of the club in Nigeria.

Speaking on the new partnership, Marketing Director, Nigerian Breweries Plc, Franco María Maggi, said as a brand, Star would love to connect with as many football fans as possible.“We see this partnership as a way to further consolidate our commitment to millions of fans and bring quality enjoyment of football with unrivalled consumer interaction experience,” Maggi said. “Star is committed as a brand to nurture this partnership like others which will positively impact on the development of the football landscape in Nigeria. The brand is investing in order to tap, among other things, also in the possibility of world-class knowledge transfer.”

Knowledge transfer in this regard refers to the learning of tactics, communication processes, club of confidence in the economy, particularly under the current administration, other opinions harped on the need to spend proceeds on projects that could fund its repayment.

To the Executive Director, BGL Capital Ltd, Olufemi Ademola, who spoke with THISDAY days after the DMO announced that the bond was oversubscribed, at 5.625 per cent Coupon rate, the bond issue was a “nice one” considering that the country’s $500 million Eurobond trade for seven per cent “it is very interesting.”

“That shows that Diaspora Nigerians are optimistic about developments in the country. It is a sign of endorsement by the guys abroad,” he added.

Similarly, Managing Director of Cowry Assets Limited, Mr. Johnson Chukwu, agreed that, at $300 million coupon rate of 5.625 per cent for a tenor of five years, the bond issue was a success.

However, there were insinuations that the entire bonds may not have been bought by Nigerians in Diaspora or institutional investors who planned to sell to retail investors.

According to Chukwu, until the list of investors and the investment bands are published, there is a doubt as to the actual investors. He insinuated that the real investor may not be entirely Nigerians in the Diaspora.

“Until the list of the actual investors is published or the band, I will say that it is unlikely that the bonds were bought by Diaspora Nigerians.,” he stated. “I state so because I have a fair knowledge of the income profile of Diaspora Nigerians and I don’t think they could have bought the bond within the time that it was bought; they would have needed more time to do so if they were to have bought that volume. It is not unlikely that some institutional investors bought the bond then plans to do retail resell.”

Another analyst and Director, Union Capital Ltd, Egie Akpata, aligned with Chukwu and insisted that the concerns around the actual investors are warranted. According to him, “If you look at the places that they went to, they went to two places in Switzerland, those are not places that you go to meet a community of Diaspora Nigerians; it is a place full of private banks; it is a place where wealthy Nigerians stash their wealth. Institutional investors could buy the bonds then resell, according to the mechanics of it, it is allowed especially in the US market, and the list of investors may not be released.” structure, team formation gathered during coaching clinics that will further enhance the current experience available in Nigeria.

The established partnership between both entities will have Star drive digital and outdoor amplification, viewership engagement and attendance at live matches that involve Barcelona.

For Star Larger, sports and entertainment are like Siamese twins that are used periodically to boost the profile of the brand. In the last five years, promoters of Star have not only leveraged entertainment to persuade consumers, they have used it to nurture talents and gain more market share. This explains why activation platforms like Star Trek, Star Quest and Star Mega Jam, have always been recurrent decimals in the nation’s entertainment scene.

In the area of sports, over the years, the Star brand has consistently supported football initiatives with platforms such as its highly impactful campaign to rally Nigerian football fans during the World Cup in 2014. The Star Super Fans Show also showcased and rewarded football fans for their passion and knowledge of the game.

Commenting on the partnership, FC Barcelona legend Edgar Davids confirmed that FC Barcelona was exploring new regions, especially in Africa’s most populous nation, Nigeria.