The Nation Newspaper

Tag: bond

  • FGN Savings Bond targeted at poor, says DMO D-G

    The Director General of Debt Management Office (DMO), Abraham Nwankwo has stated the new Federal Government of Nigeria Savings Bond (FGNSB) was designed to give them a stake in government.

    He was addressing leaders of market unions and leaders of middle income earner organisations in an advocacy/sensitisation workshop on the FGN Savings Bond in Onitsha.

    He said over the years, government has issued bond, but it remained elitist bonds, which were sold as wholesale bond to privileged individuals, corporate companies and organisation.

    “All these super rich individuals bought it as wholesale bond, but the difference we have in the FGNSB is that we are making these bond available to the ordinary Nigerians. There are a lot to benefits I  investing in the FGNSB. First is that it is an opportunity for the common man to have a stake in the country. You can boost of having borrowed to the federal government,” he said.

    “Again, your investment has interest accruing to you, straight into your bank account, and your interest is tax free. There are many benefits. By Monday next week, the savings bond will open, and it will remain open for five days. We will also disclose the interest rate, and everyone is at liberty to buy. You can invest from as little as N5,000 to as high as N50 million,” Nwankwo said.

    The workshop featured teachings on the workings of bond, and how to purchase them. DMO’s Director of portfolio management, Oladele Afolabi took participants through a lecture on the bonds, while reeling out the list of accredited stockbrokers.

    Chairman of Niger Bridgehead market, Emmanuel Anagu who spoke on behalf of other market leaders, at the event stated that he is truly convinced that the DMO meant well for the poor by taking the workshop to traders in Onitsha.

    “Before now, we hear of sales of federal government bond, but it is usually for the very rich, but today the federal government has brought it down to us, but what we ask is that we must make this workshop a regular one to drum it into the mi D’s of our people.” The DG also reiterated the importance of the purchase of the savings bond, saying that it could serve as a means of saying for the future.

  • Lagos redeems N57.5 b Bond Programme 1, Series 2

    Lagos redeems N57.5 b Bond Programme 1, Series 2

    The Lagos State government yesterday said it has redeemed the N57.5 billion Bond. The Bond was the second under the state’s initial N275billion Programme, which was launched on December 31, 2008.

    At the time of its issuance, the Bond was the first sub-national issuance to be undertaken by way of a book build.

    In accordance with the provisions of Section 236 of the Investments and Securities Act 2007 – requiring that the Register of Bondholders (‘the Register’) be closed 21-day preceding interest payments, the Register was closed on  March 29 this year.

    Subsequently, the Registrars effected payment of the principal and final coupon payment on  April 19 this year.

    Commenting on the redemption, Lagos State  governor, Akinwunmi Ambode, said: “The payment of the Bondholders of the Programme 1, Series 2 bonds further strengthens the state’s position as a reputable borrower, as demonstrated by the prompt redemption of the Bonds on maturity.’’

    The Commissioner for Finance, Mr. Akinyemi Ashade expressed optimism that the redemption of the N57.5billion would confirm the state as a credible borrower in capital markets and that investors will further illustrate their confidence in the state by investing in its upcoming Programme 3, Series 2 bond.

    The latest redemption, according to him, shows that the state has now redeemed N107.5billion of outstanding bonds, creating headroom for further issuances to support the acceleration of the state’s investment in improved physical and social infrastructure and amenities.

    He said the state remains committed to and is proud of its reputation as a most responsible issuer in the Nigerian capital markets.

    Ashade confirmed that Chapel Hill Denham acted as the Lead Issuing House on the transaction.

  • Fed Govt raises N2.07b from retail savings bond

    Fed Govt raises N2.07b from retail savings bond

    • Mulls selling $100m forward

    The Debt Managment Office (DMO) yesterday said it raised N2.07 billion  ($6.6 million) from a new two-year savings bond intended for retail investors.

    Nigeria forecasts a budget deficit of N2.36 trillion  this year, half of which it aims to fund through domestic borrowing.

    The DMO has said it offered the bond to help broaden the country’s funding base. It will be available for purchase on a monthly basis and have a maximum subscription of N50 million. It carries a coupon of 13.01 per cent.

    Meanwhile,  traders say the Central Bank of Nigeria (CBN)  plans to sell $100 million in currency forwards yesterday to be delivered within the next 60 days.

    The bank has been injecting more dollars into the system to meet the needs of importers since February. It’s trying to boost supply in the market and narrow the margin between official and black market rate.

    The local currency closed at 410 to the dollar on the black market on Wednesday, stronger than the previous 430 to the dollar. It weakened to 307.75 to the dollar on the interbank market, compared with 307.50 a dollar previously.

    The March auction attracted subscription from over 2,500 applicants during the five-day sale period, the DMO said, adding that the next sale will be on April 3.

    The government plans to increase public spending by almost 20 per cent this year and has obtained parliament’s approval for a $500 million Eurobond, after raising $1 billion from international debt market last month.

    Outstanding total debt rose to N17.4 trillion last year from N12.6 trillion in 2015 and is set to increase further, as Africa’s biggest economy grapples with its first recession in a quarter of century, caused by low oil prices.

  • Fed Govt begins bond roadshow

    Nigeria will soon meet investors before a Eurobond sale and plans to apply for a $1 billion loan from the World Bank once lawmakers approve this year’s budget, Finance Minister Mrs Kemi Adeosun has said.

    “We are about to embark on the roadshow” for the dollar bond, Adeosun said by phone from the capital, Abuja, yesterday, without giving more details. She and Vice President Yemi Osinbajo previously said they want to raise $1 billion in what would be Nigeria’s first Eurobond since 2013.

    The government hired Citigroup Inc. and Standard Chartered Bank Plc to organise the roadshow in the U.S. and London from today according to a person familiar with the matter. The notes and the World Bank loan will help plug a fiscal deficit forecast by the government to be N2.36 trillion ($7.5 billion) this year, Adeosun said separately to reporters.

    President Muhammadu Buhari presented a record N7.3 trillion spending plan to lawmakers in December in a bid to stimulate an economy experiencing its worst downturn in more than two decades because oil prices have been crashing since 2014 and investors fleeing the country. Gross domestic product (GDP) probably shrank 1.5 per cent last year, marking the first full-year recession since 1991, according to the International Monetary Fund (IMF).

    While Nigeria sought about $4.5 billion of external funding last year, it only managed to borrow $600 million from the African Development Bank (AfDB), which will be used for power generation, roads, railways and ports. The government has struggled to obtain more financing as foreign investors and the IMF have criticised its currency policies, which they say have left the naira overvalued and led to a severe shortage of the foreign-exchange businesses need to import raw materials and equipment.

    The naira trades around 315 per dollar on the official interbank market and fell to a record 500 on the black market this week as the dollar scarcity worsens.

    The yield on Nigeria’s $500 million Eurobond due in July 2023 snapped six days of increases to decline by 1 basis point, to 6.89 per cent, by 8:41 a.m. in London.

  • Wema Bank completes N50b bond listing

    Wema Bank completes N50b bond listing

    Wema Bank Plc yesterday completed the final stage of its N50 billion Bond Issuance process on both the FMDQ and Nigeria Stock Exchanges.

    A report released by the lender announced the dual listing of its series (1) seven-year Bond under the N50 billion Wema Funding SPV Plc Debt Issuance Programme. The bond tenure is seven years (due 2023) at 18.50 percent fixed rate.

    In a review note, the bank’s Managing Director, Segun Oloketuyi said: “Today (yesterday), Wema Bank completed the final stage of the Bond issuance process – the listing of Wema Bank’s series 1 (N6,295,000,000) seven-year Bond on both the FMDQ and NSE Exchanges. This is to ensure enough liquidity for the instrument and invariably increase the pool of potential investors”.

    With regards to the proceeds from the Bond issuance, he explained that despite the current economic environment, there are indeed opportunities for growth, with the government, individuals and corporates now focused on the primary and/or value chain industries. As such, the proceeds would be used in growing the SME portfolio of the Bank’s business.

    According to the subscription prospectus, the bonds are guaranteed and are direct, unsecured and unsubordinated obligation of the issuer and rank side by side without preference among themselves and equally with the claims of all holders of unsubordinated indebtedness as provided for in the Series 1 Trust Deed.

    It said in a case of the winding-up of the issuer, the claims of the trustee and the holders of unsubordinated notes against the issuer for payment of principal and interest in respect of the unsubordinated notes would be senior to the subordinated indebtedness of the issuer.

    It added that the bonds are backed by an undertaking issued by Wema Bank in favour of the trustee for bondholders supporting all the obligations of the Issuer under the programme. Besides, the bonds are exempted from taxation in accordance with the Companies Income Tax (exemption of bonds and short-term government securities) Order 2011, the Value Added Tax (exemption of proceeds of the disposal of the government and corporate securities) Order 2011 and the Personal Income Tax (Amendment) Act 2011. As such, all payments made to bondholders shall be free without deductions.

    Oloketuyi said the bank has witnessed a turnaround since the new management took over in June 2009, adding that before the coming of the new management, the lender had a negative capital position of N45 billion, with the lender virtually on its knees. He said the new management had grown the bank’s shareholders’ funds to N46 billion.

    He said the lender previously had less than one percent market share, and ran on obsolete technology, while Non-Performing Loans stood at 89 per cent. But with the new management, the NPLs have dropped to 2.9 percent while profitability has risen to new heights.

    “So, we had to start to look at what to do with the bank and, therefore, developed a containment strategy focusing on how to stabilise the bank. The periods of 2010 to 2014 was largely used to give life back to the bank. So, the first major assignment we had to do were to secure the regulatory capital. We had to recapitalise the bank, which we did,” he said.

  • Sultan urges bond among African countries

    Sultan urges bond among African countries

    Sultan of Sokoto Muhammad Sa’ad Abubakar III has said African countries should strengthen their bond and work as one family.

    Abubakar spoke yesterday when the Liberian Vice President Mr. Joseph Boakai visited him in his palace.

    His words: “We need to strive, have a more united and strong family. Nigeria will continue to ensure that stability stays in Africa.

    “We will also continue to work together to entrench peace, unity, democracy and inter-faith harmony in Africa. The Federal Government is also committed to lending support to Liberia”.

    Noting that peace was the most veritable tool of development and stability globally, the monarch said both countries had much in common and the visit will strengthen their bond.

    “Nigeria will continue to strengthen this strong bond of brotherhood,” he added.

    Boakai, who acknowledged the sacrifice Nigeria made to restore peace and unity to Liberia during its turbulent days of civil war, said: “Since independence, and when we came into hostilities, Nigeria was the first African country to come to our rescue.

    “The sultan was part of this history and Nigeria made the ultimate sacrifice in restoring peace to our nation.

    “During the Liberian civil war, the brave Nigerian soldiers were the first to set foot on the Liberian soil.”

    He said most banks, insurance firms in Liberia were owned by Nigerians, adding that “many Nigerian doctors and lecturers currently operate in Liberia.”

  • UBA opts for early redemption of seven-year N20b bond

    UBA opts for early redemption of seven-year N20b bond

    The board of directors of United Bank for Africa (UBA) Plc has decided to exercise the call option for the early redemption of the bank’s seven-year N20 billion bond, issued in October 2010. The bond has a tenor of seven years with 13 per cent fixed rate coupon. The tenor of the bond ordinarily ends in 2017.

    The bank’s directors said they would be exercising their rights to redeem the bond earlier than its full redemption period.

    Under the terms and conditions of the Trust Deed, UBA reserves the rights to early redemption from the fifth year anniversary of the bond, being September 2015.

    The board assured that the bank has adequate liquidity to meet the proposed early redemption, noting that the exercise of this call option has relatively no impact on the liquidity and capital of the bank.

    A new helmsman, Mr. Kennedy Uzoka, last Monday took over as the substantive group managing director at the UBA. The Tony Elumelu-led board of UBA had in March 2016 announced the appointment of Uzoka, a former group deputy managing director, subject to the approval of the apex bank.

    Uzoka has most recently been leading the transformation agenda of the bank, after returning from completing the Advanced Management Programme of Harvard Business School. Uzoka has over two and half decades of experience in commercial banking, strategy and business transformation.

    Prior to his sabbatical at Harvard, Uzoka served as Deputy Managing Director, UBA group and was also the CEO of UBA Africa, responsible for the Group’s operations in 18 countries across Africa. The new GMD is a graduate of Mechanical Engineering from University of Benin and holds a Masters Degree in Business Administration from University of Lagos.

    The new GMD had already given a glimpse of the underlying vision and strategies of his leadership at the first generation bank.

    Uzoka has said the bank under him will remain committed to sustainably delivering superior returns to shareholders in excess of their expectations.

    He outlined that the bank’s African subsidiaries are growing stronger and the group has a target to increase Africa’s contribution to the group’s profit to over 25 per cent in 2016 from 24 per cent in 2015.

  • Liquidity rises over N120b bond cash

    Liquidity rises over N120b bond cash

    •Emefiele lures US, UK investor

    The interbank overnight lending rate rose for the second consecutive week last Friday to an average of 15 per cent from 10 per cent a week ago, as banks scrambled for liquidity to settle bond purchases.

    The Debt Management Office (DMO) sold N120 billion worth of local currency-denominated bonds with mixed yields compared with the returns from previous issues last month while payment for the debt sale was due on Friday.

    Total banking system liquidity opened at N137.30 billion, but payment for bonds significantly reduced the level of cash in the market, leading to a sharp rise in the cost of borrowing among commercial lenders.

    Traders told Reuters some banks actually quoted as high as 50 per cent for overnight placement in early trade in their quest to get cash to pay for their bond purchases. But demand for cash dropped after the central bank refunded about 40 billion naira in cash reserve ratio to some banks.

    “We see the market trading around this level next week because of anticipation that some banks would prefer to go to the discount window to borrow at a cheaper rate of 14 percent,” one dealer said.

    Meanwhile, the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele flew to Britain and the United States last week to try to lure back investors scared off by the plunge in oil prices and resulting financial turmoil, a central bank official told Reuters.

    The CBN last month bowed to foreign pressure to remove the 16-month-old 197-per-dollar peg on the naira it had brought in to try and control its fall as crude prices plummeted.

    Investors welcomed the move but many said they were still steering clear until the economy shows signs of concrete recovery. Trade has been thin and dollar liquidity tight, leaving the CBN as the main supplier of hard currency.

    Emefiele and his deputy Dr Sarah Alade held meetings with investors in Britain and the United States, the central bank official said. “It was more like a road-show to get investors back into the country,” and authorities were particularly keen to boost dollar liquidity, he added.

    The naira tumbled to a record low of 295.25 in thin trades against the dollar on Friday after the central sold dollars to try and boost liquidity on the interbank market, traders said. It was quoted at 365 on the black market on Friday

  • Lagos retirees get N1b bond certificate

    The Lagos State government has issued Retirement Benefit Bond Certificates to the tune of N1billion to another set of 275 retirees from the mainstream, local government, SUBEB, TEPO and parastatals of government, under the Contributory Pension Scheme for the month of May this year, Director-General, LASPEC, Mrs. Folashade Onanuga has said.

    She made this known at the 27th batch Retirement Benefit Bond Certificate presentation ceremony held in Lagos. She said the payment has brought the number of retirees paid from August last year to May this year to 3,344.

    According to her, the total accrued pension rights for years, spent under the Pay As You Go pension scheme paid on behalf of retirees by the state government from the aforementioned month to date is N14.7 billion.

    She advised the retirees and beneficiaries to make judicious use of the money being presented because this turns it to assets.

    Onanuga, however, stated that activity of the pension fraudsters who always put calls through to retirees informing them of alleged short-payments in their entitlements has  been reduced drastically, due to the steps the Commission took in terms of sensitisation.

    She further disclosed that she emerged as the Pension Amazon of the year and Lagos State Government as the Most Pension Compliant State in the third edition of Business Today Online Pension and Insurance Awards 2015.

    She said the award is apt as the commitment of the state has made Contributory Pension Scheme to be a success compared to other states.

  • Nigeria to meet investors on bond sale

    Nigeria will hold a non-deal roadshow in London next week, government sources said on Wednesday, as the economy explores fund-raising options to finance a record budget deficit widened by the fall in vital oil revenues.

    Finance Minister Kemi Adeosun and officials from the central bank and debt office will meet investors next Tuesday to update the market on government policies. Standard Chartered Bank is organising the meeting, the source told Reuters.

    Nigeria plans to borrow as much as $10 billion from debt markets, with about half of that coming from foreign sources, to help fund a budget deficit worsened by the slump in oil prices that has slashed revenues and weakened the naira.

    “It’s non-deal road-show to explain government policy to investors. There’s no transaction. It’s been a while since the government came to London to update investors on what’s happening,” he said.

    The head of the Debt Management Office told Reuters last week Nigeria is likely to sell a eurobond this year.

    Nigeria has pushed ahead with some reforms meant to free up cash to invest in badly needed infrastructure, but critics worry about the pace, given the loss of oil revenues and a currency peg that has caused the economy to contract.

    In mid-May the government hiked petrol prices by 67 percent to 145 naira, ending an expensive subsidy scheme that has cost it billions of dollars. It used a rate of 285 naira to the dollar to set the prices, compared with an official rate of 197.

    The move prompted the central bank to abandon its 15-month naira peg to the dollar to adopt a flexible currency regime, a policy U-turn designed to boost exports and local manufacturing and to stave off a recession.

    But the bank has yet to clarify how the new policy announced last week will work, spooking foreign investors long worried about getting caught in the middle of devaluation.