How to Invest in Eurobonds in Nigeria

How To Invest In Eurobonds In Nigeria

A lot of Nigerians are interested to know about Eurobonds in Nigeria but they aren’t provided with sufficient information on the topic. Perhaps, you haven’t invested in Eurobonds yet but you are enthusiastic about becoming a Eurobond investor.

There is no cause for alarm because we will provide you with everything you need to know about Eurobond in Nigeria.

What are Eurobonds?

Eurobonds are one of the types of bonds in the financial market, it is issued in a currency which is not the same with that of the market or country where it is issued.

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Although the term ‘Eurobonds’ has the ‘Euro’ in its name, it is not tied, associated or connected to the Euro currency or the European Union.

In other terms, they are not really dominated in Euros as the name suggests. They can be in Japanese Yen or the US Dollars currency denomination.

Eurobonds that are denominated in the USD currency are known as Eurodollar bonds while Eurobonds that are denominated in the USD currency are better known as Euroyen bonds.

Generally, Eurobonds are refereed to as bonds which currencies are different from that of the issuer. So, any Eurobond selling in Nigeria will not be denominated in the local currency (Naira), rather, it will be dominated in a foreign currency such as the Yen, USD, GBP, etc.

For instance, a bond issued by the Federal Government of Nigeria will not be bought in Naira but will be purchased in U.S Dollars and the interest and principal repayment will be made in the United States Dollars (USD).

Usually, Eurobonds are issued by international syndicates, private organizations and most times, the government. They issue Eurobonds because they are in need of foreign-denominated currency for a given space of time. Furthermore, Eurobonds are offered at fixed interest rates and they are issued for long periods.

Reasons Why You Should Invest In Eurobonds

Eurobonds provides ample opportunity for both investors and issuers. If you are skeptical about investing in Eurobonds, consider reading the following reasons to know if Eurobonds investment is suitable for you,

  1. First, bonds are tax-free, therefore, you will not be taxed on earnings your income. If you make profits from your investment, the proceeds will are yours and they will not be paid in the coffers of tax collectors.
  2. Secondly, Eurobonds are not denominated in your local currency. If you are in Nigeria, they will not be denominated in the Nigerian Naira but they will be based in a foreign currency such as the United States Dollar. The US Dollars is one of the powerful currencies in the globe, it has the power to retain its value against the Nigeria Naira. Even if the Nigerian Naira depreciates or suffers a dip in the financial market, be rest assured that your investment is safe.
  3. Another reason to consider investing in Eurobonds is that it adds to your stream of income. If you have a single business, you can consider investing in bonds to add to your current income pool.
  4. When you invest in bonds, your capital remains intact. Also, Eurobonds are known for offering investors a higher yield on their investments.

How To Invest In Eurobonds In Nigeria

The process of investing in Eurobonds is not different from the process of investing in an ordinary bond. You can purchase the Federal Government of Nigeria Eurobonds from the primary or secondary market.

The process of investing in Eurobonds in Nigeria begins when you complete and submit the Tender for the Federal Government of Nigeria Bonds’ form. The form must be submitted to any authorized dealer (bank or broker) with payment.

Just like every other investment in the financial market, you are advised to review and examined the risk profile of any Eurobond before purchasing it. If possible, you should seek professional advice from an asset/investment management firm so you don’t lose your money.

Investing in Eurobond in Nigeria may be one of the best investment decisions you’ll ever make in your life. Do not be in a rush to join the bandwagon of Eurobond investors in Nigeria, familiarize yourself with the market by getting a quality education and information before making your investment.


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