• Thursday, June 13, 2024
businessday logo

BusinessDay

Corporate Trustees eye increased role as debt capital market expands

Chapel Hill’s NIDF eyes N20.24bn from series 10 offer

As the debt capital expands with new bond issuances and greater risks, corporate trustees are considering an increased role in ensuring safety of investments and sustainable confidence for the market.

With debt outstanding in the market to the tune of N24.46 trillion as of May 2023 and considerable growth in corporate and sub-national bond issuances rising by 502.4 percent between 2017 and 2022, players in the market have seen the need for greater role and support for regulation.

Theresa Orji, president, Association of Corporate Trustees (ACT) speaking during an interview at the 2023 Business Luncheon of the association, in Lagos, said one of the challenges facing the association is the public being able to understand what a corporate trustee does.

Orji, who is also the managing director/CEO Vetiva Trustees Limited, said that trustees were the protectors of investors in every transaction because they are the ones that have an understanding of the transaction structure.

“They ensure that everything is in place to guarantee that investor’s money comes back to him the way he has planned for it to be invested.”

Read also: Naira gains N8 at parallel market on speculated devaluation

“Not only do we need to have that explanation for the public, we also need the other capital market operators to understand the need to work together with the Trustees to ensure that the fabric of the capital market is maintained, and the structure is sustained,” Oji said.

“But we also need a legal structure to support the Trustees in doing the things that need to be done to ensure that the market moves forward, and investors are also maintained,” she added.

Kemi Awodein, managing director, Investment Banking, Chapel Hill Denham Advisory Partners, presenting the lead paper, on the theme ‘The corporate trustee as an ombudsman in the Nigerian debt capital market – Reality or aspiration,’ said “With the proper support and framework, the role of the corporate trustee as an ombudsman could become an essential component of an evolving and maturing debt capital market

According to her, the idea of a corporate trustee acting as an ombudsman in the debt capital market has both potential advantages and challenges, and whether it becomes a reality or remains an aspiration depends on legal and regulatory framework, capacity and expertise, market demand and acceptance, as well as independence and impartiality.

“Corporate trustees need to possess the necessary expertise, resources, and capacity to handle their added ombudsman responsibilities effectively, stating that if they are unable to manage the increased workload or lack the appropriate skills to mediate disputes, the aspiration of the corporate trustee acting as an ombudsman may not be achieved.”

Awodehin said ombudsman provides non-adversarial, professional, impartial, independent, and high-quality investigative services in a timely manner, investigating complaints without undue formality, forming opinions independently and impartially, without fear or favour to either the complainant or organisation (Issuer).

“Ombudsmen provide a channel to submit complaints against institutions without influence from the accused. They conduct fair and unbiased investigations at no cost to the complainant, providing resolutions or mediation services.”