Connect with us

Finance

FX Scarcity: 4 banks borrow $6.21bn from foreign market – Reports

The financial institutions include Access Bank Plc, Ecobank Transnational Incorporated, Fidelity Bank Plc and the United Bank for Africa Plc.

Published

on

Banks

Four commercial banks in Nigeria raised $6.21bn from foreign creditors between January and October 2021.

This was disclosed in analysis of reports shared on the issuer’s portal of the Nigerian Exchange Limited.

The financial institutions include Access Bank Plc, Ecobank Transnational Incorporated, Fidelity Bank Plc and the United Bank for Africa Plc.

According to them, they sought dollar liquidity through secure and unsecured notes, three of which listed their notes on the London Stock Exchange.

Recall, on February 11, Ecobank notified the NGX of successful pricing of its $300m fixed-rate, dollar-denominated bond, carrying a coupon rate of 7.125 per cent.

The financial institution noted that the issuance was oversubscribed three times, with about $900m raised. The rating of B- from Fitch Ratings hinted that the bank was more vulnerable to adverse business, financial and economic conditions but could meet its financial commitments as of the time of issuance.

The bank also announced a $350m tier 2 sustainability Eurobond raise in July issued with a coupon of 8.75 per cent, which was oversubscribed 3.6x, amounting to $1.3bn at its peak.

Access Bank, as part of its expansion drive, raised two tranches of Eurobonds in September.

Its $500m senior unsecured Eurobond rated B by Fitch Ratings and B2 negative outlook by Moody’s showed there was a high credit risk and vulnerability to adverse business, financial and economic conditions, but with a capacity to meet financial obligations.

The bank said the senior unsecured five-year Eurobond with a 6.125 per cent coupon was three times oversubscribed, ending over $1.6bn at the end of the transaction. It also completed another $500m offering with a 9.125 per cent coupon oversubscribed by 200 per cent, peaking at over $1bn.

Advertisement

This month, UBA announced its $300m senior unsecured Eurobond issued at a coupon of 6.75 per cent. The notes, rated B by Fitch and B- by S&P Global Ratings, showed a vulnerability to adverse business, financial and economic conditions.

ALSO READ  Despite effect of COVID-19, banks’ total assets rise by N6.97tn in one year

Fidelity Bank, in October, raised $400m through a five-year tenor Eurobond with a 7.765 per cent coupon, listed on the Irish Stock Exchange.

It was learnt that banks sought funding from the international markets to support dollar-needing opportunities, equity positions on their balance sheets, and mitigation of risks posed by the devaluation of the naira.

Kalu Aja, financial analyst, said that since banks provided dollars needed for the importation of goods into the country, acquiring funding from the international market was a necessity.

Adedayo Bakare, a research analyst, said:  “Ecobank and Access Bank, for example, are using part of the funds to refinance existing assets.

“Part of Access Bank’s raise was used to pay off investors for its bond that matured in October 2021. Some of it will also be used to fund its leveraged expansion drive.”

 

Advertisement
Click to comment

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Advertisement
Advertisement

Facebook