November 20, 2017 / 9:35 AM / a year ago

UPDATE 1-Nigeria starts from wide for dual-tranche

(Adds investor, trader commentary)

By Robert Hogg

LONDON, Nov 20 (IFR) - Nigeria has begun marketing a US dollar dual-tranche bond offering at attractive levels.

The sovereign is marketing November 2027s at 6.75% area and November 2047s at 7.875% area. The latter is the first 30-year tranche by a sub-Saharan African sovereign, excluding South Africa.

“The IPTs are cheap, the question is the size and how much they tighten,” said Uday Patnaik, head of emerging markets debt at L&G Investment Management. “I wouldn’t be surprised if they tighten by 40bp to 50bp.”

A trader agreed that there looks to be value. But he said Nigeria’s existing US$500m 2023s are trading tight due to age and small size, and therefore give an additional appearance of cheapness to the new 10-year.

“Thirty-year would probably be my pick. I think fair value is 7.25%-7.50%,” he said. “In general the 30-year sector is still in very high demand from real money.”

“Big picture, the issue should do well, with Brent anchored above US$60,” said the trader. “Also Nigeria’s benefited from the selling in Middle East oil names, as it’s one of the only oil names in CEEMEA without too much hair, and some liquidity.”

Timing is for today’s business via Citigroup and Standard Chartered. Nigeria is rated B2/B/B+. (Reporting by Robert Hogg; editing by Sudip Roy)

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