First Bank to redeem $300m debt two years ahead

A fortnight from now, First Bank of Nigeria Limited will redeem its $300million fixed rate subordinated Note held by FBN Finance Company B.V., with two years before the due date.

By this development, the 8.25 per cent subordinated notes raised at the international debt markets due August 2020, will now be repaid on August 7.

According to the bank, calling these notes ahead of maturity demonstrates its strength in foreign currency liquidity, and the resilience of its balance sheet.

“Despite the 2020 bond being a subordinated Tier II instrument, we are able to redeem it without any impact on our capital ratios. This is due to the surplus Tier II capital we currently hold, confirming the robust capital base of the bank,” a statement from the bank said.

To ensure the smooth redemption, FirstBank said it systematically built up internal liquidity on the back of a strong franchise, and its deep market access in the course of 2018, as full year deposits had grown 11.9 per cent year to date, and 6.9 per cent year on year.

However, the lender said it 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.

“It is important to note that the bank through its various SPVs, like FBN Finance Company B.V., is a repeat issuer and this exercise would make it the second time FirstBank will call and prepay bondholders following its debut 2007 9.75 per cent U.S. $175 Million, which was called in 2012. It is a known issuer in international debt markets and has significant market access,” the statement added

The lender said it has remained focused on delivering on its strategic objectives and continues to execute deals towards improving its asset quality and risk management; enhancing revenue generation; and optimising operational efficiency.