Nigeria’s First Bank to redeem $300m 8.25% notes two years ahead of maturity
Adesola Afolabi was a businessamlive reporter and Head of Financial desk.
FBN Finance company B.V. is exercising its option to call the $300,000,000 8.25 percent subordinated notes raised in the international debt markets due August 2020.
The decision by the firm is coming on the heels of First Bank of Nigeria (FBN) decision to redeem the fixed rate subordinated note held by FBN Finance Company B.V.
To this end, the bank intends to call and prepay holders of these notes on August 7, 2018.
According to the bank, calling these notes ahead of maturity demonstrates the strength of the bank’s foreign currency liquidity and the resilience of its balance sheet.
“Despite the 2020 bond being a subordinated tier 2 instrument, we are able to redeem this without any impact on our capital ratios, due to the surplus Tier 2 capital we currently hold confirming the robust capital base of the bank,” the bank said on Tuesday.
The bank noted that it had systematically built up internal liquidity on the back of a strong franchise and its deep market access in the course of 2018 in order to ensure the smooth redemption.
“FCY [foreign currency] deposits had grown 11.9 percent year-to-date and 6.9 percent year-on-year. FirstBank will not be reissuing debt in Eurobond markets in the near term, following the planned redemption.
“Reissuance will be a function of our funding needs, market conditions, expected pricing in relation to alternative funding structure and sources. At the moment, the bank has ample liquidity to meet foreign and local currency funding needs and maintains sufficient market access to raise additional funds, if required,” the bank explained.
Noting that the bank through its various SPVs, like FBN Finance Company B.V. is a repeat issuer, it added that this exercise would make it the second time it will call and prepay bondholders following its debut 2007 9.75 percent $175 million, which was called in 2012.
The bank stated its reputation as a known issuer in international debt markets with significant market access, expressing that it has remained focused on delivering on its strategic objectives and continues to execute towards; improving its asset quality and risk management; enhancing revenue generation, and optimizing operational efficiency.