Ecobank Transnational Incorporated (ETI) is issuing a debut $500 million five-year Eurobond, priced to yield 8.5 percent-9 percent, the lender told BusinessDay on Thursday.
The bond for which book building is slated to end today, April 12, 2019 is rated “B” – (Stable) by both Fitch and S&P.
According the pan-African bank, the bond which will be quoted on the London Stock Exchange is tradable both locally and internationally.
“This is an opportunity for our clients who seek attractive US dollar returns for their investment portfolio,” the lender said in a mail.
Deutsche Bank, Renaissance Capital, Standard Bank and Standard Chartered Bank are joint lead managers on the issue.
The group announced last year that it was suspending its road show due to difficult market conditions.
Ade Ayeyemi, CEO of the Lomé-based pan-African group, said in 2018 that market conditions in emerging countries hardened and as such they would postpone the issuance to 2019.
“There was no trade war when we started. Now, we wait. If things do not calm down, we will just postpone to next year (2019),” Ayeyemi had mentioned.
Present in about 30 African countries, Ecobank recorded after-tax profit of N101.9 billion in 2018. This amounts to a 46 percent increase when compared to the N69.7 billion it reported in 2017.
Ecobank’s plan to issue a bond is coming less than a month after Access Bank issued a N15 billion five-year fixed rate senior unsecured green bond.
The green bond, which has been awarded an Aa- rating by Agusto & Co and certified by the Climate Bonds Initiative having met the global climate bonds standard, saw its offer by way of a book build fully subscribed.
Paul Uzuma, managing director, Halo Nigeria Capital Ltd, said other banks would follow in line with Ecobank.
“This is because raising funds through equity in Nigeria for the banks is quite challenging,” Uzuma said.
He explained that the expectation for the bank was that after elections, economic environment would have been stable enough for companies to start raising funds through equities, but with the way the stock market is now, sourcing funds through bonds will be the easiest route for the them.
“I am sure other banks like Fidelity, FCMB, Sterling Bank, etc would like to issue bonds,” Uzuma said.
Checks by BusinessDay revealed that investors are now more attracted to Nigerian fixed income securities which are a less risky asset compared to the more risky equities market.
As at the close of trading yesterday, there was some offshore interest in 1-year Treasury Bills at 12.90 percent levels, while yields on the shorter term (three months) fell by 0.27 percent and the six months tenor remained flat.
Analysts say with oil prices above US$71/barrel, the Nigerian carry trade remains attractive.
Ayodeji Ebo, managing director, Afrinvest Securities Ltd, said opportunity for dollar lending by banks remain muted.
“We feel that currently in the economy, lending opportunities are not really available in Nigeria; the oil and gas sector that should be able to take more of these dollar lending opportunity is not able to, fuelled by the continued delay of the PIB,” Ebo said.
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