Nigerian bank to list unsecured debt notes on Irish Stock Exchange

This second tranche of the Notes is under the Zenith Bank’s $1 billion Global Medium Term Note (GMTN) programme initiated in 2014. The Bank had raised $500 million in the first tranche of the Notes.

President/CEO, Dangote Group, Alhaji Aliko Dangote GCON; Group Chairman, FBN Holdings Plc, Dr. Oba Otudeko CFR, Chief Executive Officer, The Nigerian Stock Exchange (NSE) Mr. Oscar Onyema; and Chairman, Zenith Bank, Mr. Jim Ovia at the NSE Premium Board launch.

An unsecured debt note is a financial debts instrument that is backed or secured by the issuer's (debtor’s) assets. Unsecured debts notes are similar to debentures but offer a higher rate of return with less security than a debenture. The note is structured for a fixed period of time.

The note is usually not backed by any collateral and therefore presents the most risk to lenders (investors in the notes).

This second tranche of the Notes is under the Zenith Bank’s $1 billion Global Medium Term Note (GMTN) programme initiated in 2014. The Bank had raised $500 million in the first tranche of the Notes.

According to a statement signed by the Bank’s Secretary, Mr Michael Osilama, and was sent to the Nigerian Stock Exchange (NSE), the bank intends to use proceeds from the issue for its general banking purposes.

“The bank does not intend to obtain a certificate of capital importation (CCI) in respect of the proceeds of the notes that are not converted into naira as a CCI imported into Nigeria and converted into Naira.

“Therefore, the bank will make principal repayment and interest payments on the notes from its foreign currency reserves, as it will not be able to obtain access to the Nigerian foreign exchange market for the purpose of making such payment,” the statement stated.

“However, in the event that the bank does have sufficient foreign currency reserves to meet the principal and interest payment due to the notes, the bank would be required to obtain the approval of the Central Bank of Nigeria (CBN) to enable it to access the official foreign exchange market.”

Also, the Fitch Ratings assigned an Expecting Rating of ‘B+(EXP)’ and the Recovery Rating of ‘RR4’ to the $500 million notes. The recovery rate is the average recovery prospects in the event of default by the issuer.

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