Home Business Ecobank to raise a 5-year dollar denominated bond

Ecobank to raise a 5-year dollar denominated bond

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Ecobank has announced plans to raise a five-year dollar-denominated bond. The bank has therefore mandated international lenders to arrange investors meetings in the United States and Britain.

According to Reuters, proceeds from the bond offer will be used for debt refinancing among other things. The bank has also appointed Deutsche Bank, Standard Bank, and Standard Chartered to arrange meetings.

Currently, rates in the US have gone up this means the bank is paying more. There are, however, concerns about the exchange rate volatility which is currently low in the country but a swing may mean the bank will have to pay more Naira to offset its dollar debt obligation.

Tier two banks in the country had a tougher time dealing with series of crisis, and many of them have had to embark on a capital raise. Diamond bank, disposed off its non-essential assets to boost its capital base.

Some of them, may not pay dividends for the 2017 financial year due to recent guidelines issued by the Central Bank of Nigeria (CBN).

Also, another tier two bank, Union Bank is also considering raising a Eurobond with plans to deploy the proceeds to boost the bank’s capital base and lending to the agriculture sector.

Recall that Ecobank Bank had recently announced the successful placement of a $400 million convertible debt. The convertible debt was structured in three tranches, the first was a convertible loan facility of $250 million arranged through Public Investment Corporation (PIC) of South Africa, an institutional holder.

The second tranche consisting of $140 million convertible notes was fully subscribed to by Qatar National Bank (QNB), also an institutional shareholder.

While the third tranche comprising $10 million convertible notes was reserved for shareholders other than those who participated to the tune of $1.11 million. The remaining balance was subscribed by QNB, bringing QNB’s participation in both tranches to $148.9 million.

Ecobank in its 2018 Q1 financial results for the period ended 31st March 2018, recorded 11% surge in revenue from ₦178,388 billion Q1 2017 to ₦198,615 billion in Q1 2018. Profit Before Tax also increased by 48% from ₦22,895 billion in Q1 2017.

Ecobank Transnational Incorporated ETI was founded in 1988 under a private sector initiative spearheaded by the Federation of West African Chambers of Commerce and Industry, with the support of the Economic Community of West African States (ECOWAS)  The bank has operations in 36 African countries and employs over 17,000 people.

ETI shares are currently trading at N20.05 on the floor of the Nigerian Stock Exchange (NSE) with a one year return of 47.97%.




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