Fidelity Bank Plc, a mid-tier Nigerian lender, plans to issue a N100 billion ($261-million) bond in the local currency to boost its capital ratios and funding capacity. The Lagos-based bank wants to issue the debt in a series, starting with a N50 billion offer in the last quarter, Chief Executive Officer Nnamdi Okonkwo said by phone.
The extra funds will help increase the bank’s capital adequacy ratio by 2 percentage points, from 18.8 per cent in June, he said.
The lender plans to refinance a N30 billion, seven-year fixed-interest security with part of the proceeds by recalling it two years earlier, Executive Director Gbolahan Joshua said in a separate interview. Nigerian lenders need higher capital levels to meet increasing demands from customers whose businesses have been hampered by the triple whammy of the Covid-19 outbreak, a slump in oil prices and the devaluation of the local currency.
The central bank expects the industry to restructure as much as 65 per cent of loans this year. Fidelity Bank is looking to raise funds at a cheaper rate than the 16.5 per cent it paid for a similar issuance in 2015, according to Joshua. Yields on the West African nation’s debt have dropped since the Central Bank of Nigeria last year barred individuals and non-bank institutions from buying short-term securities in its Open Market Operations.
The yield on the government’s benchmark bond due in 2049 dropped to 10% on Tuesday, compared with 14.8 per cent when it was issued in April last year.