Four banks raise N232bn from international market

Director-General of the DMO, Mr. Abraham Nwankwo

Four Nigerian banks raised $1.45bn (N232bn) from the International Capital Market between January 2011 and July 2013, the Debt Management Office has said.

The Director-General of DMO, Dr. Abraham Nwankwo, disclosed this in a presentation made at a one-day retreat for correspondents  in Kaduna on Friday.

He said 20 companies had raised over N200bn from the local debt market in the past eight years.

According to him, the four banks – Guaranty Trust Bank Plc, Access Bank Plc, Fidelity Bank Plc and First Bank Plc – were able to raise the money from the international capital market because of the confidence the DMO had built in the Nigerian economy.

This, he stressed, was a result of the Sovereign Debt Bond that the nation had issued.

Statistics released by DMO showed that GTB had in May 2011 raised $500m (N80.1bn) from the ICM. Access Bank followed in July 2012 when it raised $350m (N56.1bn). Fidelity Bank raised $300m (N48.1bn) in May 2013 while First Bank raised $300m in July.

All the bonds issued by the banks were for a tenor of five years, apart from First Bank which issued a bond with a tenor of seven years, the DMO boss stated.

The coupon rate of the GTB’s bond is 7.5 per cent; Access Bank’s coupon rate is 7.25 per cent; Fidelity Bank’s own is for 6.87 per cent while that of First Bank is 8.25 per cent.

Nwankwo said, “By successfully addressing some of the challenges and constraints that faced Nigeria’s public debt management, the DMO has created windows of opportunities for the private sector to raise long-term capital for the development of the real sector and infrastructure.

“Already, some private firms have explored and exploited these opportunities both in the Domestic Bond Market and the International Capital Market. Opportunities exist for growth in terms of number and diversity of debt issuers, range of instruments, size and investor base.”

He also stated, “In response to the creation of a Sovereign Benchmark in the ICM, four Nigerian corporate firms have taken due advantage to issue Eurobonds between January 2011 and July 2013 amounting to $1.45bn.

“In response to the favourable domestic market environment created, 20 Nigerian corporates have raised long-term capital of over N200bn from the domestic debt market between 2005 and 2012 to fund the development of the real sector.”

Nigeria had in 2011 issued Sovereign Debt Bond of $500m. This was followed in July 2013 with the issuance of a double tranche $1bn Sovereign Debt Bond.

Nwankwo listed the benefits of deepening the debt market to include increased foreign exchange inflows which have contributed to the growth in external reserves and stability of the naira, with an increase in the share of foreign investors’ holdings in FGN securities and significant reduction in government’s cost of borrowing.

Others include growth and diversification of the investor-base for FGN securities and creation of more borrowing space for other domestic borrowers to access funds in the local market which addressed the risk of crowding out the private sector.