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Bond Issuance Slumps to Six-year Low



  • Bond Issuance Slumps to Six-year Low

Sovereign bond issuance by African nations including Nigeria plunged to its lowest level since 2010 as buyers pushed up yields and proposed new borrowing plans.

Stripping out South Africa, sub-Saharan nations managed to get only one hard-currency bond last year, Financial Times reported.

Even that, a five-year $750m bond issued by Ghana in September, had to be scaled down from plans to borrow $1bn over 10 years amid buyers’ fears that the west African state would wrestle to meet its fiscal targets.

This compares poorly with the interval from 2013 to 2015, when sub-Saharan states (excluding South Africa) issued 21 greenback bonds, elevating a complete of $18bn, accordance to a report by Exotix Partners.

The Head of Analysis at Exotix, Stuart Culverhouse, said final year’s weak issuance was largely due to a weak exterior backdrop, with low commodity costs and tepid enthusiasm for rising markets among worldwide buyers.

This resulted in a “large dislocation in yields,” which surged past 12 per cent for African commodity exporters, earlier than falling again to round eight per cent later within the year.

“Loads of nations most likely couldn’t afford to difficulty. The solely nations that would most likely didn’t need to,” Culverhouse said.

The sub-Saharan Economist at Renaissance Capital, Yvonne Mhango, said one other issue behind the issuance drought was that many nations were trying to implement fiscal consolidation.

“If you’ve got nations which have been requested to rein of their spending then it implies that the necessity to increase additional funding falls,” Mhango said.

The Head of Rising Market Sovereign Analysis at BlueBay Asset Management, Graham Stock, said the shortage of an IMF programme triggered buyers to shun Zambia’s overtures, whereas oil producers, reminiscent of Angola, had been out of favour amid low international costs.

“We had various oil producers that may have issued final year however are nonetheless struggling to exhibit that they’ve their funds suitably adjusted to handle increased debt ranges,” Stock said.

He added, “Last year was uncommon in that there weren’t many governments that wanted difficulty and those that may have appreciated to have carried out so weren’t ready to accomplish that.”

He forecasts that a pick-up in issuance this year from the likes of Zambia (assuming it does enter an IMF programme), Kenya and oil producers reminiscent of Nigeria, Angola and Gabon, as their funds enhance in step with recovering crude costs.

“I believe the markets can most likely take in that,” he said.

Mhango also believes the country will attempt to borrow this year, given that it is among the comparatively few main nations within the area with an expansionary price range.

Kenya is one other chance, she said, adding that it could go for a syndicated mortgage as an alternative.

However, Mhango was sceptical that the funds of most commodity producers had improved sufficient to help issuance at a yield they’ll afford, given a backdrop of the rising United States rates of interest.

Culverhouse warned that the times when African nations might borrow at charges of five to six per cent, as Zambia, Nigeria, Kenya, Ivory Coast and Namibia all did between 2012 and 2015, “have most likely gone.”

However, Stock said that the truth that a wave of 10-year bonds issued in 2007 and 2008 at the moment were approaching maturity meant governments would probably be eager to refinance.

Moreover, the timing could also be propitious he said, adding that with nations reminiscent of Argentina, Colombia, the Dominican Republic, Turkey and the Philippines, sometimes rated triple or double-B, presently available in the market, Stock added, “The subsequent transfer may be to see extra issuance from the best yielders, reminiscent of these in Africa,” he said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.

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Banking Sector

CBN Grants Lotus Bank Non-Interest Banking Licence



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The Central Bank of Nigeria (CBN) on Thursday, June 17, granted a non-interest banking licence to Lotus Bank Limited.

This was contained in a statement titled ‘CBN grants Lotus Bank licence to commence non-interest banking operations’.

The statement read in part: “Lotus Bank seeks to pursue the mission of creating value and growth for all through digital innovation and best-in-class customer experience for Nigerians.”

Commenting on the grants, the founder and managing director of Lotus Capital (the pioneers of non-interest finance in Nigeria), Hajara Adeola, said the bank was starting its operations on a solid foundation of experienced leadership and a strong advisory council of experts.

Adeola explained that the bank is managed by a team of seasoned professionals and financial experts led by the Managing Director/Chief Executive Officer, Kafilat Araoye, who has over 25 years of commercial banking experience.

She added that the institution’s focus and guiding principle is ‘to deliver an alternative option to interest-based banking and to cater to the needs of not just the banked but also the underbanked and unbanked population.

According to her, non-interest banking was geared towards supporting the real sector and Lotus Bank aimed to improve financial inclusion in the country.

The founder of the bank, however, disclosed that it would operate transparent pricing models as it was the norm in non-interest banking.

The statement added: “Our values are deeply rooted in partnership. A critical component of our mission is the provision of innovative solutions that drive ethical prosperity for all stakeholders.

“We pride ourselves on digital solutions that provide our customers with the convenience of unlimited access to our services and products.”

“Our products and service offerings will include non-interest business financing, deposit products (current, savings and investment accounts) and personal financing.”

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Banking Sector

Fidelity GAIM Season 4 Final Draw To Hold On July 22



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One of the leading financial institution in Nigeria, Fidelity Bank Plc, has announced plans to enrich the lives of fifteen Nigerians with a total of 39 million Naira at the final draw of the “Get Alert in Millions Campaign (GAIM)” Season 4 savings promo, slated for July 22, 2021.

The savings promotion, which is specifically aimed at promoting the culture of saving among Nigerians, is one of the bank’s many initiatives aimed at rewarding new and existing customers for their unwavering loyalty and patronage.

Despite the fact that the promotion was halted in 2020 due to the Coronavirus (Covid-19) Pandemic and the resulting global lockdown, hundreds of Nigerians have benefited from this unique reward scheme in which lucky customers are credited with millions of naira and consolation prizes via a draw system.

The Chairman, Promo Committee, Fidelity Bank Plc, Mr. Richard Madiebo expressed his delight at the resumption of the savings promotion, stating that the campaign seeks to reward customers for their loyalty and patronage. According to Mr. Madiebo, for the past twelve years, the bank has empowered new and existing customers, providing an avenue for many to change their fortunes through its savings Promo.

He stated that the bank takes pride in keeping its promises, adding that the lender would continue to look out for innovative ways to satisfy and enrich its customers across the nation.

“And as we wind down on the 4th season of the GAIM promo, we are elated at the prospect of not only driving financial inclusion across Nigeria but also at the unique opportunity to enrich the lives of our customers especially in times of economic uncertainties”, noted Madiebo

Over the years, the leading tier two Bank has continued to intensify its efforts and innovate ways towards ensuring customer and stakeholder satisfaction. Through this promo, Fidelity Bank has promoted financial inclusion through digital channels and enriched the lives of its customers even in times of economic uncertainties.

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Banking Sector

Zenith Bank Gets Recognition for Best Corporate Governance



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Zenith Bank Plc’s strong business ethos, ethical values, and impeccable corporate governance have been rewarded with ‘Best Corporate Governance’ Financial Services’ Africa 2021 award by the Ethical Boardroom.

The bank, in a statement yesterday, said the award, published in the June 2021 edition of The Ethical Boardroom magazine, recognised the bank’s adherence to global best practices and institutionalisation of corporate governance as well as setting an industry-wide example of best practices in that field.

Commenting on the award, Group Managing Director/Chief Executive of Zenith Bank Plc, Mr. Ebenezer Onyeagwu, said: “This recognition is a testament to our commitment to quality, accountability, fairness and transparency in our engagement with all stakeholders.

“It is also an affirmation of the bank’s professionalism, ethical conduct and sustenance of global best practices and standards which is attributable to the joint collaboration of the management and staff.”
The award comes on the heels of others and recognitions that the bank has garnered in recent times for its track record of excellent performance and commitment to global best practices.

For instance, Zenith Bank was voted as Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020; Best Bank in Nigeria in the Global Finance World’s Best Banks Awards 2020 and 2021, and Best Corporate Governance’ Financial Services’ Africa 2020 by the Ethical Boardroom.

Also, the bank emerged as the Most Valuable Banking Brand in Nigeria in the Banker Magazine Top 500 Banking Brands 2020 and 2021, and Number One Bank in Nigeria by Tier-1 Capital in the “2020 Top 1000 World Banks” Ranking by The Banker Magazine.

Similarly, the bank was recognised as Bank of the Decade (People’s Choice) at the THISDAY Awards 2020, Retail Bank of the year at the 2020 BusinessDay Banks and Other Financial Institutions (BOFI) Awards, and Best Company in Promotion of Good Health and Well-Being as well as Best Company in Promotion of Gender Equality and Women Empowerment at the Sustainability, Enterprise and Responsibility (SERAS) Awards 2020.

Zenith Bank has been generally adjudged a corporate governance compliant bank by the Nigerian Exchange Limited (NGX) hence its listing on the Premium Board of the Exchange.

The bank continues to sustain this reputation and reappraise its processes to ensure that its business conforms to the highest global standards at all times.

The bank places a premium on its core business strategy anchored on people, technology and service, to create value for its numerous clientele.

“With a team of dedicated professionals, the bank leverages its robust Information and Communication Technology (ICT) infrastructure to provide cutting-edge solutions and products through its network of branches and electronic/digital channels,” the statement added.

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