Nigeria’s Fidelity Bank launches N75 bln 10-year bond to exist old debt
Nigeria’s Fidelity Bank has launched an N75 billion fixed unsecured subordinated bond with 10-year tenor to exit old debt at cheaper rate, according to its financial advisors.
The lender launched the debt issuance under its N100 billion bond issuance programme and it was opened for investor’s participation from Monday, December 7 to run to December 14.
The bank, according to the financial advisor has provided the book building price guidance between 6.50-7.50 percent for the 10-year debt.
The issue has been assigned a rating of A- by Agusto, and A by Datapro. The proceeds from the issuance would be utilised to support growth in the issuer’s risk assets in SME and retail business as well as investments in technology & retail infrastructure.
The bank’s chief operating and information office now executive director, Gbolahan Joshua had in September disclosed that Fidelity would raise about N50 billion through bonds by the fourth quarter of this year as part of measures to pay off existing debt.
According to him, the bank is taking the opportunity of the fall in yield on fixed income across the board in the domestic debt market to redeem old debt at a lower cost.
Debt market yields have dropped from a high of 18 percent three years ago. Yields on the one-year treasury bill are quoted under 3.5 percent.
On Tuesday, the average bond yield across the curve cleared higher by 3 bps to close at 1.76 percent from 1.73 percent on the previous day.
Many Nigerian companies have tapped the debt market, especially the commercial paper to raise cheap funds to pay off existing debt and increase working capital.