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Zenith Bank issues $500m Eurobond at 6.5 percent yield


Zenith Bank sold USD500m in 5-y senior unsecured Eurobonds yesterday which pay a coupon of 6.25 percent.

The yield at inception was 6.5 percent, slightly below the high 6 percent area initially announced, and the equivalent spread over UST of 485 basis points bps.

“The bank appears to have taken advantage of a favourable window of opportunity in global capital markets characterised by a further compression in emerging market Eurobond spreads (EMBI+ spread at 314 bps on 10 April vs a yearly high of 397 bps on 3 Feb) and a move lower in US Treasury rates earlier this month (5-y at 1.59% on 10 April vs 1.79% on 3 April),” said Samir Gadio, an emerging Markets strategist, at Standard Bank in London, in a note released April 11.

“In such a bullish context, the typical demand-supply mismatch for African USD fixed income assets and especially corporate Eurobonds assisted the sale. Furthermore, the stronger NGN (160.8 on 10 April) in recent days may have also eased foreign investor concerns about the bank’s exposure to FX risk,” Gadio said.

The proceeds of the Eurobond is expected to help finance the power sector, oil and gas and other project loans.

The order book amounted to $1.3bn which represents an oversubscription, with US, UK and European investors accounting for 44 percent, 35 percent and 9 percent of the allocation.

Zenith Bank is the second largest bank in Nigeria by total assets as at 31 December 2012.

The Group provides banking and other financial services in Nigeria, other countries in Africa and Europe with a customer account base of over two million accounts from 340 branches in Nigeria and 29 branches across Africa and Europe as at 31 December 2013.

It had total assets of N3.1 trillion ($20.19 billion) and a Tier 1 capital of N506.8 billion ($3.25 billion) as at that date.

Zenith Bank reported gross earnings for the year ended 31 December 2013, of N351.470 billion.