Emeka Okoroanyanwu
Fidelity Bank Plc plans to issue a N100 billion, about $261-million bond in local currency to boost its capital ratios and funding capacity. The bank wants to issue the debt in a series, beginning with a 50 billion-naira offer in the last quarter.
Chief Executive Officer, Nnamdi Okonkwo who disclosed this said the extra funds will help increase the bank’s capital adequacy ratio by 2 percentage points, from 18.8% in June.
Fidelity Bank plans to refinance a N30 billion seven-year fixed-interest security with part of the proceeds by recalling it two years earlier.
The bank said it needs higher capital levels to meet increasing demands from customers whose businesses have been hampered by the Covid-19 outbreak, a slump in oil prices and the devaluation of the Naira.
This time around, Fidelity Bank plans to raise funds at a cheaper rate than the 16.5% it paid for a similar issuance in 2015.
Yields on the country’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% last Tuesday, compared with 14.8% when it was issued in April last year.