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AfDB Issues Inaugural Local Currency Bond in the Nigerian Capital Market

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After receiving the Securities and Exchange Commission (SEC) of Nigeria’s approval to establish a NGN 160 billion Medium Term Note (MTN) Programme and “No Objection” from the SEC to start the book building process on June 6, 2014, the African Development Bank (AfDB) or the “Bank”) proceeded to tap the market for its maiden local currency issuance in the Nigerian capital market.

The AfDB launched a 7-year, semi-annual fixed rate coupon bearing bond structured with a 3-year grace period preceding a 4-year amortising profile on principal, introducing a new instrument into the domestic market and adding another issuance into the supranational asset class.

 The Bank successfully raised NGN 12.95 billion, issuing at a discount of about 75 bps below the comparable reference point on the government yield curve (Federal Government of Nigeria 27 Jan 2022) to price at 11.25%.

The book building commenced on June 20 with a closing date on July 4 and the settlement of the proceeds occurred on July 11.

The AfDB’s MTN Programme is the first ever to be established by a supranational issuer in the Nigerian capital market, and the amount raised also represents the largest ever issuance, and also the longest maturity instrument in its asset class to be introduced to the Nigerian market.

Acceptance of the issue in the market was also further evidenced and demonstrated by the diverse category of investors to whom the securities were distributed (including pension funds, asset managers, banks and insurance companies).   

Pierre Van Peteghem, Treasurer of the African Development Bank Group, outlined the importance and significance of the transaction to the Bank as it marks its inaugural issuance in the Nigerian market, given the size and relative sophistication of this market and Nigeria being the Bank’s largest shareholder.

He added that “issuances in the local markets allow the Bank to lend to its borrowers in local currencies thereby eliminating their currency risks; and to participate in the development of African capital markets by providing a new investment product to the local institutional investors.”

The Bank’s local currency bonds are structured to match the underlying projects to which the Bank will lend the proceeds.

The proceeds of the maiden NGN issuance will be lent to a client who will use the funds to finance local SMEs and some infrastructure projects.  

This issuance marks the AfDB’s third domestic bond issue in Africa, outside of South Africa. The Bank previously issued two local currency bonds in Uganda in August 2012 and May 2013.

“The Nigerian Naira issuance confirms the AfDB’s commitment to launch more local currency bonds across the continent, with proceeds used to provide local currency loans to the Bank’s clients. This will enable us to better respond to client needs, particularly with respect to mitigating the foreign exchange risks posed by hard currency loans,” said Van Peteghem.

AfDB was advised on this transaction by Stanbic IBTC Capital (a member of the Standard Bank Group) and Rand Merchant Bank Nigeria, a wholly owned subsidiary of the FirstRand Group.

As part of its Local Currency Initiative, the AfDB has issued, since 2005, a series of offshore bonds linked to the Botswana Pula, Ghana Cedi, Kenya Shilling, Tanzania Shilling, Uganda Shilling, Zambian Kwacha and the Nigerian Naira.

The Bank currently has authorization to issue domestically in over 10 African markets including, the CFA Franc zone, Zambia, Ghana, Egypt, Tanzania and Kenya.

The African Development Bank is currently celebrating its 50-year anniversary, with over 4,500 projects approved amounting to over USD 118 billion since its creation in 1964, in various sectors including agriculture and rural development, financial intermediation, industry and manufacturing, and education and health.


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E-Financial

FG Sacked IST Members over Fraud- Ahmed

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Mrs Zainab Ahmed, minister of Finance Budget and National Planning, has said the Federal Government sacked some past members of the Investments and Securities Tribunal (IST) as they indulged in corruption.

FG Sacked IST Members over Fraud- Ahmed

Inaugurating the new members, the minister charged the new members to eschew corruption and be forthright.

Bar. Azi Amos Isaac was appointed as Chairman for a five year term and Bar. Nosa Smart Osemwengie, was re-appointed as member for a second term of four years.

“The problem with the tribunal has been infighting amongst members, lack of industrial harmony and series of complaints bordering on maladministration.

“This has been the bane of the tribunal and a source of embarrassment not only for the Ministry of Finance but for the government in general,” Ahmed said.

The new chairman, Azi, assured the finance minister that, “the teething issue of restiveness has been addressed since he assumed duty,” adding that, “The place is calm and the staff have become very supportive.”

Azi said since 2003, the tribunal has “given judgment in the value of assets worth over N844 billion and that from 2017 to date, they have given decisions in monetary value totalling over N28bn.

“It has not failed in its adjudicatory responsibility.

“It has carried out its assignment with candour and integrity and intends to improve on what has been on ground.”

 


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CBN Bans Customer-to-Customer Forex Transfer

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Central Bank of Nigeria (CBN) has banned transfer of foreign exchange (forex) from one customer to another.

CBN Bans Customer-to-Customer Forex Transfer

According to the apex bank, forex cash lodgements into domiciliary accounts can only be done by the account owners henceforth.

An internal memo available in the media space explains that the new guidelines are necessary to review the utilisation of inflows into customers domiciliary accounts.

The circular states: “Forex inflows cannot be credited to customers until the legitimacy of funds is established.

“They can have unfettered access by telegraphic transfers up to a limit of $40,000 monthly for payment of medical bills, school fees, subscription to professional bodies subject to existing CBN guidelines.

“Transfers from one customer to another is prohibited. Transfer within related companies is allowed subject to a limit of $50,000 per month.”

It recommended that proceeds from non-oil exports should be sold to banks, used for repayment of dollar term loans, and self-utilisation for trade transactions for LC, bills and Form A.

Also oil export proceeds from E&P companies are to be used to pay contractors and service providers employed by the oil companies in addition to the recommended uses for non-oil FX proceeds.

Offshore forex inflows from other Nigerian banks and internal account to forex transfers sourced from offshore inflows are to be used for trade transactions subject to eligibility for E-Form M.

“Upon confirmation of the legitimacy of the inflows, customers can have unfettered access, subject to a maximum of $50,000,” the document read.

“Utilisation for trade transactions subject to processing of eligible trade transactions using E-Form M. Payment for services must be backed with demand note from offshore beneficiary and other regulatory documents.

“Related party transfers are allowed to the maximum of the inflow received. The transfer request should be backed by a signed instruction from the account holder.” Payment of government fees and levies are also allowed to the maritime, oil and gas, aviation. government parastatals and export processing zones.

 


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Stanbic IBTC, Standard Bank, Listed Among Top African Corporate Brands

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Stanbic IBTC Holdings PLC and its parent company, Standard Bank, have emerged amongst the top winners of the 2020 Tech Times’ Africa LinkedIn Corporate Brand Awards.

The Stanbic IBTC Group emerged the second position in the category, with total votes of 3,515, out of 24 firms nominated for the award. Standard Bank placed the fourth 2,494 votes.

Nominations for this award opened to the public on July 1, 2020 and closed on July 14.

Shortlisted nominees were announced on August 24 while voting commenced immediately and voting ended on September 8, 2020.

The Corporate Brand Awards was instituted by Tech Times’ Africa, an online platform for leading technology, innovation, and startup stories.

Expressing his delight on the awards, Dr Demola Sogunle, Chief Executive, Stanbic IBTC Holdings PLC, said that both Stanbic IBTC Holdings PLC and Standard Bank had been deliberate and consistent in making a remarkable impact in Africa’s financial sector.

“Our sincere appreciation goes to the organisers of the Africa Corporate Brands Awards and to every member of the public who voted. This is a reflection of the high level of trust and confidence that the public has reposed on us,” he added.

Dr Sogunle further said that Stanbic IBTC Holdings PLC would remain relentless in portraying the organisation as one of the most influential corporate brands in Africa.

He stated: “Stanbic IBTC Holdings PLC and Standard Bank have relentlessly contributed to driving the growth and development of the African financial ecosystem. These awards affirm our efforts, and we are encouraged to raise the bar continually.”

The Africa Corporate Brand Award is designed to identify and recognise outstanding companies. It also projects their achievements and impacts on African society and the world at large.


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