Nigeria has issued guidance for its $500 million debut Eurobond indicating a yield of around 7 percent, higher than that of West African peer Ghana, market sources said on Thursday.
The guidance for the 10-year paper said the timing and coupon had yet to be announced. The issue is expected on Friday.
Seven analysts contacted by Reuters put the expected yield for the bond in a range of 5.5 - 7.7 percent, compared with Ghana's Eurobond, due to mature in 2017, which is trading at around 6.2 percent.
Nigeria, sub-Saharan Africa's second-biggest economy, aims to set a benchmark in the global market and those involved in the deal say the pricing is key.
We had expected a moderately lower yield which would reflect the abundant global liquidity and appetite for high-yielding risky assets, coupled with Nigeria's strong current account fundamentals, robust foreign reserves and marginal external debt, said Standard Bank analyst Samir Gadio.
At such levels, Nigeria's Eurobond looks attractive relative to rated peers, and this reinforces our view that the instrument will rally in the coming weeks as significant demand pushes down secondary market yields, he told Reuters.
A successful issue by Africa's top oil exporter could reassure others on the continent of the strength of demand for African debt, convincing them to press ahead with similar but delayed plans.
Deutsche Bank and Citigroup are Nigeria's bookrunners for the Eurobond while Barclays Capital and FBN Capital, a subsidiary of Nigeria's First Bank, are financial advisers on the issue.