FMDQ pulls first corporate bond listing with UBA’s N30.5bn issuance

United Bank for Africa plc on Wednesday listed its N30.50billion bond on the trading platform of FMDQ OTC plc; a new move analysts say will guarantee the bank liquidity, as well as transparent price discovery process around the fixed income instrument.

The listed Bond is Series-1 of UBA plc 7-year 16.45% Fixed Rate Subordinated Unsecured Notes, due in 2021 (the UBA Bond). Currently, the bond is the largest corporate bond on the OTC platform.

Currently, the cost of listing bonds on the Nigerian Stock Exchange (NSE) is 0.15 percent of the value of the programme, while at the FMDQ OTC plc which is an alternative it costs 0.075 percent of the bond value, a representing 50 percent reduction in listing cost.

The listing by UBA yesterday, is the first corporate bond to be admitted on the FMDQ Over-The-Counter (OTC) platform, following the approval of the FMDQ Bond Listing and Quotation Rules by the Securities and Exchange Commission (SEC) in December last year.

Speaking at the bond listing ceremony, Bola Onadele, managing director/chief executive officer, FMDQ plc who commended the issuer for the bold step, also reiterated the Exchange’s commitment, driven by its “GOLD” (Global Competitiveness, Operational Excellence, Liquidity, and Diversity) agenda for the development of the Nigerian financial markets, through its efficient platform for the registration, listing, quotation and valuation of bonds.

According to Onadele, “listing on FMDQ provides a wide range of benefits across the debt market value chain, positively impacting the Nigerian debt capital market (DCM) stakeholders i.e. issuers, investors, issuing houses, market makers and regulators.

FMDQ is a securities exchange and self-regulatory organisation registered by SEC, positioned to lead innovation and development in the Nigerian DCM space. It provides a platform for listing, quoting and trading of fixed income and currency products.”

He said, “Through its trading and surveillance systems, and the publication of the FMDQ Daily Quotations List, FMDQ has empowered the Nigerian bonds market with price discovery, transparency and market integrity.

“We are delighted today to announce that FMDQ is taking these exceptional levels of information transparency even further, through the provision of continuous disclosure of pertinent information on debt issues listed on its platform; information including, among others, issue size, tenor, issue and maturity date, coupon, yield, issuer ratings, shelf prospectus, pricing supplement and issuer issue history.”

Phillips Oduoza, group managing director, United Bank for Africa (UBA) Plc said at the bond listing that, “It is the largest fixed income issuance we had in 2014. We are the first Nigerian company to undertake dual listing of corporate bond. FMDQ is here to revolutionise the market. FMDQ has become Nigeria’s foremost debt capital market.

“Our bond listing on this platform will avail foreign investors the opportunity to invest in the bond. The bond has boosted our level of capitalisation.”

According to Oduoza, UBA accessed the FMDQ OTC market when no one was sure of financial market liquidity. He assured investors in the UBA bond of guaranteed returns.

He said the bank is always willing to explore new frontiers to meet with its growth needs, adding that the N30.5 billion that has been raised from the bond issue would be used to provide long term funding to UBA customers across Africa.

“Investors in UBA bond made the right investment. Their returns are guaranteed because we are focused on ensuring our long term growth strategy. This listing by UBA is the largest of many more corporate listings (financial and non-financials) that will be coming to the FMDQ platform,” Oduoza said.

Earlier in her speech, Toyin Sanni, Chief Executive Officer, United Capital Plc, the Lead Issuing House that sponsored the listing of the UBA Bond on FMDQ, noted that the credibility of the Issuer and the transparency which the OTC debt capital market offers investors will drive liquidity around the bond.

“UBA is one of Africa’s largest financial institutions, so we have no doubt that its bonds will be actively traded on the FMDQ” she said. “This is the largest corporate bond that was issued in the Nigerian Capital Market in 2014 and will be a pioneer corporate bond dual listing in Nigeria, as this represents the first simultaneous corporate bond listing on the FMDQ platform and the NSE thus fostering greater price discovery and transparency.”

Tumi Sekoni,  Group Head, Business Development, FMDQ said “As Nigeria’s foremost debt capital securities exchange, FMDQ recognises the growth potentials of issuers of debt in the Nigerian capital market and thus provides them with a remarkable opportunity to raise the profile of their issues and access a deep pool of capital.”

According to Sekoni, “Some benefits to the Nigerian DCM of listing on FMDQ include global visibility and transparency to the listed debts, improved secondary market liquidity, price formation and benchmark pricing, resulting in a more globally competitive capital market.

“An efficient, transparent and well regulated market, which FMDQ promotes, will attract and retain investors (domestic and international), further developing the Nigerian financial market, and by extension, the Nigerian economy.”

Bonds admitted and listed on FMDQ are traded by its Dealing Members, the market makers to all classes of bonds, thereby providing secondary market trading liquidity to the Nigerian bond market. Circa 99% of FGN bonds are traded on FMDQ. FMDQ, as part of its value-add to the Nigerian bond market specifically (and the Nigerian fixed income market as a whole), will be improving secondary market trading liquidity in the non-FGN bond market (i.e. corporate, sub-national etc. bonds) through its Fixed Income Specialists.

To mark the landmark occasion was the signing of the FMDQ Listing Register, decoration of the FMDQ Bond Listing Wall, unveiling of the FMDQ Bond Listing Scroll and the presentation of the FMDQ Bond Listing Plaque to the Issuer.

Iheanyi Nwachukwu