Bank lists Investment Management SPV 7.96b bond on FMDQ platform
Sterling Bank Plc has listed the ‘Sterling SPV N7.965 billion series 1, 7-Year 16.50 per cent fixed rate unsecured bond, under a ₦65.00b debt issuance programme on FMDQ OTC Securities Exchange platform.
Speaking during the listing ceremony in Lagos on Monday, the Executive Director, Sterling Bank, Abubakar Suleiman, Mr. Abubakar Suleiman explained that issue was a seven year debt instrument, noting that the total amount to be raised by the bank is N60 billion.
He said the capital will be used to further strengthen the bank’s capital for future growth. The structure also allows bank to enhance their credit rate even further by ensuring that the proceed from the capital exercise is partially invested in government bonds , thereby giving the investors’ the confident that their money is fully repaid.
“The market is quite robust; it depends on the pricing that you are willing to pay. For instance, we were able to issue a bond at a coupon 16.5 at a time when interest rate is quite high. If you were willing to pay higher coupon, you will be able to raise more money.
“Once we feel that the yield in the market is sufficiently moderated, then we go to the market but the market is extremely robust, if you see the size of fixed income that is traded in the market on a weekly basis, it is huge and it is growing and it can support our efforts to raise capital.”
He applauded FMDQ’s contribution to the growth of the Nigerian debt capital market by facilitating active secondary market trading, and opined that the bank was offering greater value to its esteemed investors by listing on FMDQ to enhance the liquidity of the bonds.
The Vice President & Divisional Head, Marketing & Business Development at FMDQ, Ms. Tumi Sekoni whilst delivering the welcome address, congratulated the issuer for successfully raising ₦7.96b from the market, notwithstanding the current economic climate.
She further explained that the listing would contribute to the growth of the nation’s corporate bond market, invariably injecting renewed confidence into the market .
Sekoni assured all parties that the FMDQ Listings & Quotations Service was continually refined and tailored to provide, among others, a unique opportunity for issuers to raise the profiles of their issues and access a deep pool of capital, thereby meeting their long-term funding needs.
She added that investors’ confidence is promoted through the availed transparency, information disclosure, price formation and visibility.
The Partner at Constant Capital Partners Ltd, Niyi Omojola explained that the firm innovative investment structure which enabled the Sterling SPV Bond share in the same investment grade rating as Sterling Bank PLC, enlarges the range of potential investors in the bond.
The innovative structure, according to him, protects investors by providing Federal Government of Nigeria bonds-backed credit enhancement while investing in the Tier II Note of the bank.