FirstBank of Nigeria Limited has successfully issued a $450 million tier-2 Eurobond, THISDAY learnt at the weekend. The debt instrument with a seven-year tenor has a call option after five years.
According to a reliable industry source, the Eurobond also has a coupon of eight per cent and 8.25 per cent yield to maturity.
The debt instrument is expected to continue to extend the tenor of the bank’s dollar funding profile and support its continued lending to the corporate sector. It is also expected to raise the bank’s capital base.
FirstBank had in 2013, issued a $300 million Eurobond.
The latest issue by FirstBank increased the amount of funds raised by Nigerian banks from the Eurobond market this year to N1.550 billion. Three Nigerian banks, Zenith Bank, Diamond Bank and Access Bank, had raised a total of N1.1 billion from the dollar-denominated debt market in the first half of the year.
In line with its desire to boost its international presence, FirstBank last year acquired 100 per cent equity interest in the West African subsidiaries of the International Commercial Bank Financial Group Holdings AG (ICBFGH). With that, the Nigerian bank expanded its operations to four more countries on the continent.
The transaction had expanded FirstBank’s geographic footprint to cover 10 markets internationally, with existing operations outside Nigeria in the United Kingdom and France through its subsidiary, FBN Bank (UK) Limited.
The Group Managing Director/Chief Executive Officer of FirstBank, Mr. Bisi Onasanya, had said the acquisition clearly aligned with the bank’s strategic focus.
According to him, as a result of the acquisition, FirstBank would consolidate its position as one of the largest corporate and retail banking financial institutions in Africa (excluding South Africa).
To the Managing Director/Chief Executive Officer, Citibank Nigeria Limited, Mr. Omar Hafeez, the security challenge in the north-eastern part of Nigeria has not deterred foreign investors from buying debt instruments issued by Nigerian banks.
“The investment community is very well informed. Nigeria is a loan market and financial investors have been tapping into treasury bills and bonds for a very long time,” Hafeez said.
Hafeez said Nigeria was witnessing an increase in both foreign direct investments and portfolio flows.
“The demand for long-term dollars is increasing in Nigeria as industries such as oil and gas and power develop,” he added.
He said banks were tapping Eurobonds to bolster their capital bases and also to finance big-ticket deals in the oil and gas and the newly privatised power sector.