* Citi to sell more Eurobonds for Nigeria banks
* Investors shrug off security and election risks
* Citi growing in Africa's biggest economy
By Chijioke Ohuocha
LAGOS, July 2 Worsening security in Nigeria has
not deterred foreign investors from buying its assets,
Citigroup's country head said on Wednesday, citing $1.1
billion worth of Eurobonds it had traded for three local lenders
so far this year.
But any spread of attacks further south or to the commercial
hub of Lagos could start to put even established investors off,
Omar Hafeez told Reuters in an interview.
A violent Islamist insurgency in Nigeria has killed hundreds
this year, with the abduction of more than 200 schoolgirls by
Boko Haram making world headlines in April and overshadowing the
country's rise to overtake South Africa as the continent's top
Africa's top oil producer also faces polls in 2015 that are
likely to be the most closely fought since the end of military
rule in 1999, with many fearing political violence and rampant
spending on patronage, as usually happens in election cycles.
"The investment community is very well informed ... Nigeria
is a loan market and financial investors have been tapping into
treasury bills and bonds for a very long time," Hafeez said.
"The way the market looks at Boko Haram ... it's still
relatively restricted in terms of geographic presence ... but an
increase (of attacks) to anywhere in the major centres will have
consequences," he said.
Nigeria is growing as an investment destination, attracting
capital equity and debt investors, but security and political
risks cloud its outlook.
Hafeez said Nigeria was witnessing an increase in both
foreign direct investments and portfolio flows.
Hafeez said Citi was the largest arranger of Eurobonds in
Nigeria and had sold $500 million for Zenith Bank,
$400 million for Access Bank and $200 million for
Diamond Bank in the first half of the year.
FCMB last week mandated Citi and Standard
Chartered Bank to raise Eurobonds. Hafeez said he
expected more to follow.
"The demand for long-term dollars is increasing in Nigeria
as industries such as oil and gas and power develop," he said,
adding that the demand could not be met locally.
He said banks were tapping Eurobonds to bolster their
capital bases and also to finance big-ticket deals in the oil
and gas and newly privatised power sectors.
Elections next year could become a worry if they affect the
naira exchange rate to the dollar and interest rates.
"I think we could expect a certain amount of volatility
pre-election but have I seen people sitting on the fence? Not
really," he said.
"Commercial realities determine the strategies, so it's
really not elections per say, it's what elections will do to the
FX, interest rate market."
Incoming central bank governor has said he will work to
maintain a stable exchange rate and will not lower interest
rates before 2015.
He said Nigeria was Citibank's biggest operation across
sub-Saharan Africa and that it was expanding its footprint to
bank more local firms, especially as multinational oil firms
divest from the oil industry to domestic companies.
(Editing by Tim Cocks and Andrew Roche)