In a move poised to reshape access to Nigeria’s sovereign bond market, Bank of New York Mellon (BNY Mellon) and Standard Bank Group have launched a Global Depositary Notes (GDNs) program backed by Nigerian sovereign debt instruments denominated in naira.
The initiative, confirmed Thursday by the Central Bank of Nigeria (CBN) following an earlier report by Bloomberg, is aimed at attracting foreign investors to Nigeria’s high-yielding local currency bond and Treasury bill market.
The CBN described the development as a milestone in efforts to integrate Nigeria more deeply into the global financial system. In its official statement, the apex bank was quoted as saying, “The initiative is designed to give international investors streamlined access to the elevated yields available in Nigeria, Africa’s most populous nation. The depositary notes will be eligible for settlement through major international clearing systems, Euroclear and Clearstream, enabling broader participation from global institutional investors. This development represents a significant milestone in efforts to deepen foreign access to Nigeria’s local debt market.”
The program is expected to eliminate many of the structural barriers that have traditionally kept foreign portfolio investors at bay, including difficulties around currency repatriation, FX volatility, and regulatory complexity. By issuing GDNs, investors can access Nigerian sovereign instruments without needing to transact directly in the Nigerian market, instead buying internationally settled instruments backed by those assets.
Under the new structure, GDNs will be issued in two separate tranches per Nigerian bond: Regulation S notes for non-U.S. investors, and Rule 144A notes for qualified U.S. institutional investors. Both versions will be eligible for settlement through Euroclear and Clearstream, two of the world’s most widely used cross-border clearing systems.
Chris Kearns, global head of depositary receipts at BNY Mellon, emphasized the transformative potential of the initiative.
“This initiative reflects both institutions’ commitment to unlocking investment potential across Africa and delivering innovative solutions that support capital market development,” he said. “We look forward to building on this foundation and expanding access to other key markets across the region.”
The appeal of Nigerian sovereign debt lies in its exceptionally high returns. On June 4, the government issued 182-day Treasury bills at a yield of 18.5 percent. As of June 12, the country’s benchmark 2033 bond was trading at 19.33 percent. These yields are among the highest in the emerging and frontier markets universe and offer a compelling proposition to investors seeking inflation-beating returns in a low-growth global environment.
Sola Adegbesan, Head of Client, Africa Regions & International Global Markets at Standard Bank., described the program as a timely solution for global investors looking to diversify into African markets.
“As a bank with African roots and global reach, we are proud to introduce this innovative solution, which offers a simplified and accessible entry point into the Nigerian market — presenting investors with a compelling opportunity to invest in one of Africa’s most dynamic economies,” said Adegbesan.
BNY Mellon also elaborated that the GDNs would allow investors to hold exposures in naira-denominated assets while managing them through internationally recognized custodial systems. The firm said the GDNs will be issued in two series per Nigerian bond: Reg S and 144A, and will be eligible for settlement in Euroclear and Clearstream.
The launch comes as Nigeria moves aggressively to restore investor confidence and rebuild foreign capital inflows, which have suffered in recent years due to exchange rate misalignment, FX backlogs, and a perception of policy unpredictability. But under the leadership of CBN Governor Olayemi Cardoso, the country has initiated sweeping reforms: unifying the exchange rate, scaling back deficit financing from the central bank, refocusing monetary policy on inflation control, and fostering transparency in market operations.
This GDN program gives Nigeria a chance to attract dollar inflows without adding to its foreign debt stock. By keeping the debt in local currency while raising interest from international institutions, Nigeria avoids the repayment risks tied to external borrowing and exchange rate swings, which have proven costly in recent years.
The move mirrors successful models adopted in other emerging markets, such as Brazil and South Africa, where similar financial innovations have brought stability and capital inflows to previously underutilized segments of the debt market. With approximately 20 percent of the world’s population considered underbanked or underserved in terms of access to reliable financial instruments, tapping into these broader investor bases could prove pivotal.
If successful, this could also set the stage for Nigerian corporate bonds to be repackaged and offered globally under similar structures, opening new pathways for the private sector to attract capital without relying on Eurobonds or syndicated foreign loans.
For investors, the GDN initiative offers a rare opportunity: access to yields above 18 percent, managed via global custodians, and backed by the government of one of Africa’s largest economies.
“We believe that GDNs will ultimately benefit the country and wider West African region. We look forward to adding to this innovation in a way that underpins our overall bullish view of Africa,” added Adegbesan.
