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$500m Eurobonds of another Nigerian Commercial Bank oversubscribed by 240%
The global offering is a five-year senior unsecured bond (144A/Reg S) which was listed on the Irish Stock Exchange, and will further support the Group’s strategic vision of growing its franchise across the continent and client segments.
Group Managing Director/CEO, United Bank for Africa (UBA), Kennedy Uzoka; Non Executive Director, UBA, Rose Okwechime; Chairman, Tony Elumelu; Non Executive Director, Owanari Duke; Vice Chairman Ambassador Joe Keshi; Non Executive Director, Foluke Abdulrasaq andGroup Company Secretary, Bili Odum, during the 55th Annual General Meeting of the company in Lagos.
The outcome of the fundraising, which was the first attempt by the bank in the Eurobond market, indicated that there is a strong appetite for Nigerian originated debts instruments, as Zenith’s back second tranche of $500m unsecured bond was also oversubscribed by 300% in May 2017.
According to the Moody’s Banking Outlook report released in May 2017, Nigerian banking industry was adjudged stable and its forex liquidity level rated adequate. This may be one of the major reasons for the increase in investors’ confidence about debts instruments from these commercial banks.
“With oil prices and economic activity gradually recovering in Nigeria, we expect banks’ dollar liquidity pressures to gradually ease over our outlook period.”
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“However, we expect asset quality to worsen slightly over the outlook period, as historically low oil prices, currency depreciation and economic contraction experienced in 2016 continue to generate new nonperforming loans in 2017,” the Moody reported.
The UBA’s bond was rated by Fitch and S&P as B and stable outlook, which indicate that the issuer has limited financial risks and is capable of ensuring repayment at the debts maturity date. The bond will mature in June 2022.
Speaking on this development, the Group Managing Director/CEO of UBA Plc, Mr Kennedy Uzoka stated that: “This successful dollar-dominated offering further illustrates global investors’ confidence in the strong fundamentals of our Group. The $500 million bond will complement our stable funding base and support the growth of our balance sheet and the overall business.”
Mr Kennedy also stated that “more importantly, this medium-term funding will further enhance our strength in financing profitable, impactful projects on the African continent.”
The Group’s Chief Financial Officer, Mr Ugo Nwaghodoh, also remarked that: “UBA’a debut global offering is another milestone for us. It is timely in the Group’s growth phase and aligns with our strategic plan to profitably grow the balance sheet, as we maintain our prudent risk management and benchmark asset quality risk.”
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The United Bank of Africa is one of Nigeria’s tier-one banks with 1000 branches and over 14 million customers spread across 14 African countries. The bank also has branches in New York, London and Paris.
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