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Tag: bond

  • Investors in $500m FGN Bond to get allocation Friday

    Investors in $500m FGN Bond to get allocation Friday

    Investors in Nigeria’s maiden foreign currency-denominated domestic bond will receive their allotments on Friday.

    This follows the conclusion of proposal for the $500 million bond by the Federal Government and its professional parties.

    Market sources yesterday said the bond, which closed on Friday, will be formally issued one week after. It is technically known as settlement.

    The September 6 settlement date will become the issuance date, upon which the tenor and coupon of the five-year sovereign bond will begin to count.

    The Series I $500 million Domestic United States (U.S.) Bond opened on August 19 and closed on scheduled August 30 date.

    It is a five-year bond, with bi-annual interest payment in currency of issuance and a coupon or interest rate of 9.75 per cent per annum. The bond will be listed on the Nigerian Exchange (NGX) and FMDQ Securities Exchange.

    Sources added that the Debt Management Office (DMO), which oversees the issuance and management of federal government’s debt, issuing houses and other professional parties are already collating returns from receiving agents.

    Underlining the importance of the settlement date, the DMO explained that the interest on the investment will begin to accrue from the issuance or settlement date, following the closure of the offer.

    According to the DMO, once the allotment process is completed, the bonds will be credited to the respective Central Securities Clearing System (CSCS) accounts of the investors who opt for their bonds in CSCS.

    For investors without an existing CSCS account, a non-trading CSCS account will be created. These investors will however need to regularise their accounts by appointing a stockbroker to facilitate trading in the secondary market.

    DMO noted that both existing investors with CSCS accounts and those without accounts will enjoy equal rights as the non-availability of CSCS accounts will not affect any investor’s right to receive interest due or coupon payments and the principal amount upon maturity.

    Read Also: DMO auctions 4 FGN bonds valued at N360b

    The federal government had entered into an irrevocable commitment that it shall on no account convert or repay the principal amount and interests on the $500 million bond in naira.

    According to the Trust Deed for the $500 million bond, the federal government pledges an irrevocable commitment that it shall keep fidelity to the nature of the bond as a dollar-based issuance, with both the principal and the coupon to be paid in the currency of issuance.

    The Trust Deed is the binding and enforceable legal agreement between the federal government and subscribers to the $500 million bond. The bond has no independent rating as it carries the sovereignty of the Federal Republic of Nigeria, and thus shares Nigeria’s sovereign ratings.

     Besides the interest rate of 9.75 per cent per annum, the $500 million bond also qualifies for tax exemption for pension funds and other investors. It has also been granted liquid assets status by the Central Bank of Nigeria (CBN), implying that banks can use such investments in calculation of their liquidity ratio (LR).

    Trustees and pension fund administrators can also invest in the bond. It is considered as risk-free with the sovereignty and credit of Nigeria as guarantee.

    Market consensus had described the bond pricing as highly attractive, and there were indications it would be oversubscribed.

    Preliminary book-building reports from sources close to the issuance had indicated that there were strong possibilities of a substantial oversubscription. The bond’s structure allows government to absorb oversubscriptions within the limit of the programme’s total size of $2 billion.

    Market sources said the pricing was in alignment with the current yield of Nigeria’s Eurobond of equivalent tenor. Nigeria’s Eurobond of between three and five years currently yield between 9.662 per cent and 10.03 per cent, thus the mid-point pricing of 9.75 per cent is considered attractive.

    The bond has potential to attract large number of foreign investors, according to most analysts.

    “For foreign investors, the price is attractive when compared to yield in United States, Germany, Japan and United Kingdom. The risk premium for Nigeria’s sovereign risk is adequate,” a senior investment banker stated.

  • Fed Govt’s Bond auction boosts investors’ confidence

    Fed Govt’s Bond auction boosts investors’ confidence

    The just-concluded March auction by the Debt Management Office (DMO), which witnessed three offerings of Federal Government bonds has demonstrated the investing public’s optimism in the nation’s economic management and policy orientation.

    According to available data, the auction results provide some crucial insights into Nigeria’s current economic climate.

    Read Also: We will ban issuance of mining licenses to investors without requisite plans – Alake

    The Federal Government gained a strategic advantage with this large infusion of money from the bond auction, which will support its infrastructure and development projects with vital funding.

  • ‘Fed Govt’s March bond auction reflects investor confidence’

    ‘Fed Govt’s March bond auction reflects investor confidence’

    The just-concluded March auction by the Debt Management Office (DMO), which witnessed three offerings of Federal Government bonds, has demonstrated the public’s optimism in the nation’s economic management and policy orientation.

    According to data, the auction results provide some crucial insights into Nigeria’s current economic climate.

    The Federal Government gained a strategic advantage with this large infusion of money from the bond auction, which will support its infrastructure and development projects with vital funding.

    The Nation reported that in new debt issuance aimed at bridging the government’s deficit and expanding the domestic capital market, the Federal Government sought to raise N450 billion from the public.

    The bonds, through which it aimed to raise the funds included, a new issuance- the three-year FGN March 2027 and reopening of the seven-year, 18.50 percent FGN February 2031 and the 10-year, 19.00 per cent FGN February 2034 bonds.

    But given the recent trend of government issuances and final allotments being oversubscribed, market analysts predicted that the final allotment might triple.

    Read Also: NEITI: Three tiers of government share N10.143tr in 2023

    This was because the Central Bank of Nigeria (CBN) had issued a similar PMA for the sale of Nigerian Treasury Bills (NTBs), which saw oversubscription of more than 827 percent, ensuring the government to significantly increase its final capital raising.

    The government eventually allocated N5.7 billion, while the apex bank offered N85.5 billion in subscriptions for its 91-day instruments.

    In contrast to the N49.7 billion subscription, the initial offer size for 182-day NTBs was N918.4 million. However, N4.9 billion was finally allotted.

    Also, the initial offer size for 364-day NTBs was N159.9 billion, but subscription totalled N1.4 trillion with final allotment reduced to N150.8 billion.

    And as projected, the Federal Government raised N475.67 billion in its March bon d auction, capitalising on the current rally in rising rates. 

  • Firm redeems N3.5b bond

    Firm redeems N3.5b bond

    Real estate company, Lekki Gardens Estates, has repaid its N3.5 billion Series 1: three-year bond.

    This was confirmed by the financial sector rating agency, Global Credit Rating (GCR).

    The bond matured in January. It was the company’s debut in the Nigerian debt capital market in January 2021, followed by a N25 billion commercial paper in June 2022. 

    Read Also: Lagos pays 1,013 retirees N3.149b in 103rd bond presentation

    It repaid subscribers of the N4,180,000,000.00 Series 1 (tranches A & B) issuances under the commercial paper programme in April and June 2023.

  • AMCON N3.8 trillion Bond matures 2023

    The Asset Management Corporation of Nigeria (AMCON) Notes worth N3.8 trillion will mature in 2023, a report by the Central Bank of Nigeria (CBN) has shown.

    According to the CBN’s Annul Activity Report released yesterday, the AMCON Bond was issued in December 2014 at six per cent interest rate  and have remained outstanding at end-December 2018, same as in 2017.

    The bonds which were taken up solely by the CBN, were issued in a restructuring exercise, and will mature in 2023.

    Meanwhile, AMCON recently  hinted on the corporation’s plan to disengage Asset Management Partners (AMPs) that are not effective in recovering N740 billion debts assigned to them.

    The AMPs are currently handling over 6,000 accounts within AMCON portfolio but outsourced to them.

    The accounts outsourced to AMPs constitute only 20 per cent or N740 billion of the total Eligible Bank Assets (EBA) portfolio of N3.7 trillion.

    AMCON Managing Director, Ahmed Kuru said the corporation places equal importance on the recovery efforts as they count towards the achievement of the corporation’s core mandate.

    He also promised the corporation may assign more accounts to AMPs that have shown aggression and zeal based on the review of the AMP scheme so far.

    Kuru spoke at the 2019 edition of the AMCON/AMPs Interactive/Feedback Session in Abuja.

    AMPs, are consortiums appointed by AMCON after a rigorous selection process with specialist skills required to ensure recovery and debt resolution; banking, legal, valuation and accounting.

     

     

  • IDA launches bond to boost investment in poor countries

    The International Development Association (IDA) yesterday in Washington DC, United States (U.S) launched its first bond in its nearly 60-year history.

    Global investors took advantage of the opportunity to invest in the triple A-rated asset, raising $1.5 billion to address some of the most pressing development issues to support life-changing investments in the world’s poorest countries.

    The World Bank Group President Jim Yong Kim, said: “The bond issue will allow IDA to tap into the power of capital markets to tackle some of the world’s biggest challenges and help millions lift themselves out of poverty.”

    He said while IDA is a new bond issuer, it is “an established institution, with an almost 60-year track record as the leading source of development finance and expertise for some of the fastest growing economies in the world. As a borrower, it leverages its unrivaled capital position – the largest equity of any multilateral development bank – and decades of strong donor support, a solid track record of repayments, and prudent financial management.”

    Also speaking, the World Bank Group Managing Director and Chief Financial Officer, Joaquim Levy, said: “IDA’s inaugural bond issuance is a landmark in mobilising capital for development finance. By leveraging the balance sheet and the significant achievements of IDA for the first time, we are delivering shareholders value for money, opening new investment opportunities in the fixed income space and, most importantly, scaling up IDA’s ability to have an impact where it makes the greatest difference.”

    World Bank Vice President and Treasurer Arunma Oteh said: “IDA received a resounding response from the market for its debut issuance. Investors globally seized the unique opportunity to be the first to invest in IDA’s triple-A rated bond and make a positive impact in the lives of hundreds of millions of people around the globe.”

    She assured investors that as the World Bank grow’s IDA’s borrowing programme, “we will continue to ensure a strong financial condition and prudent financial and operational management for IDA. We will also continue to put to work for IDA the World Bank Treasury’s 70-year track record of innovation in connecting capital markets with development.”

    The bank’s Vice President for Development Finance Axel van Trotsenburg said three years ago, the international community agreed that business as usual is no longer enough for development finance, and committed to leveraging aid balance sheets, scaling-up, and raising more capital to help the poorest countries achieve Sustainable Development Goals (SDGs) by 2030.

  • Ondo gets extension on N27b bond

    The Ondo State House of Assembly yesterday approved three years’ extension for repayment of the government’s N27 billion bond inherited from the previous administration.

    The resolution followed a letter from Governor Olurotimi Akeredolu, seeking approval to restructure payment period of the bond.

    Akeredolu noted that restructuring the payment would enable his administration attend to other financial expenses.

    The Assembly, at plenary presided over by Speaker Bamidele Oleyelogun, approved additional three years for repayment of the bond.

    It agreed that restructuring the bond would reduce the state’s monthly debt services and inject more funds into the recurrent expenditure.

    Debating the governor’s request, Majority leader Olusegun Araoyinbo said the letter should be given express approval.

    Araoyinbo said this would enable the government to make more funds available for relevant items.

    The lawmaker noted that about N775.88 million was to be deducted from the state’s allocation within 2012 and 2019.

    According to him, this has reduced the state’s financial strength.

    The Majority leader said that if the Assembly could approve the bond restructuring, “the state will be saving about N400 million every month”.

    Araoyinbo said if the loan repayment period was rescheduled to between 2019 and 2022, the monthly repayment would come down to N311.11 million.

    Also at plenary, a bill for an amendment of the 2017 Appropriation Bill, which the governor sent to the Assembly, scaled the second reading.

    Oleyelogun referred the bill to the House Committee on Finance and Appropriation for scrutiny.

  • ‘Impact of $3b bond on debt ’ll be modest’

    The Federal Government’s plan to issue USD3 billion worth of foreign bonds of up to three years maturity to refinance maturing naira-denominated treasury bills, if approved, will have a modest impact on broad debt sustainability indicators, experts at PricewaterhouseCoopers (PwC Nigeria) have said.

    In line with Federal Government’s debt management strategy to rebalance its debt portfolio for domestic and foreign debt, from the current 69 per cent: 3 1 per cent to a targeted 60per cent: 40 per cent, the Federal Executive Council (FEC) recently approved a plan to issue USD3 billion worth of foreign bonds of up to three years maturity to refinance maturing naira-denominated treasury bills.

    Although, the National Assembly is yet to approve this plan, Partner & Chief Economist Andrew S Nevin and Senior Manager & Economist Adedayo Akinbiyi, both at PwC Nigeria, said in their latest economic alert accessed by The Nation that the impact of Nigeria’s refinancing plan on her debt sustainability is likely to be modest.

    The experts noted that although timelines are not clear, they suspect issuance is unlikely to be earlier than 2018, given the extensive preparatory work required in issuing international sovereign bonds.

  • Lagos raises N85b bond to fund projects

    Lagos State has raised N85.14 billion ($271 million) in seven and 10-year bonds to fund infrastructure and environmental projects, its Commissioner for Finance, Akinyemi Ashade said yesterday.

    Giving the breakwon, Ashade said the bond consists of N46.37 billion  seven-year debt at a 16.75 per cent rate and N38.77 billion via a 10-year paper with 17.25 per cent interest.

    The issue is the third tranche of a 5N00 billion debt programme approved by the state House of Assembly last year and was sold through book building, Ashade said.

    The state sold N60 billion worth of five-year bonds last year, the first tranche of the debt programme planned to be issued over the next two to five years.

    “We value the reputation we have earned as the most responsible issuer in the Nigerian capital markets and thank everyone who has worked with us to deliver a successful outcome,” Ashade said.

    Lagos is home to the commercial hub of Africa’s biggest economy, a sprawling city of more than 21 million people which badly needs infrastructure upgrades.

    Stock brokers said the state paid higher interest than the inflation rate on the bond in a bid to lure investors into buying the debt.

    The country’s annual inflation was 16.1 per cent in June, while data for July is being expected from the National Bureau of Statistics (NBS) till Aug. 28.

    The federal Government paid 16.25 per cent on its 10-year bond last month.

    Most states in the country depend on their share of federal oil revenues but Lagos has diligently pursued its Interneally Generated Revenue (IGR) and complemented it with the debt market to fund its developmental projects.

  • Fed Govt eyes N20b green bond

    The Federal Government plans to launch its delayed “green” bond worth N20 billion within the next few weeks, former environment minister, Amina Mohammed, has said.

    Mohammed, now deputy secretary-general of the United Nations, told the Thomson Reuters Foundation proceeds from the sovereign bond – which is expected to raise about 20 billion naira ($63.6 million) from its first tranche – would be used to fund renewable energy, transport and agriculture projects.

    Nigeria’s green bond could lay the groundwork for other African countries to follow, she added. Green bonds have been around for a decade but sovereign borrowers had been absent from the market, which was traditionally dominated by international development banks.

    The green bond market has enjoyed strong growth in the last two years, with issuance jumping 105 percent last year alone to a record $72 billion, according to data compiled by Thomson Reuters and the Climate Bond Initiative.

    Poland and France have both launched sovereign green bonds since the end of last year. Mohammed, who initiated the Nigerian bond while she was environment minister, said its issue had been postponed from an initial date at the end of March because the country’s budget had to be passed first.

    “We’ve just had the budget approved, so I believe Nigeria will look, probably within the next few weeks, to doing (the bond issue),” Mohammed said on last Thursday on the sidelines of a U.N. conference in Mexico on disaster risk reduction.

    Announcing the plan for the bond in February, the environment ministry said it was aimed at widening Nigeria’s funding options and diversifying the OPEC member’s oil-dependent economy, which is the largest in Africa.

    Peter Tarfa, director of the climate change department in the environment ministry, told a separate conference in Barcelona that the bond would be launched in the coming month, and would generate resources for climate change projects, including forest-planting and a mass rapid transit system. The total amount raised, including a second tranche targeted for September, would be more than N45 billion, he said.