FCMB Raises N5.1 Bn via Bonds

FCMB has sold N5.1 billion ($16 million) of bonds, less than it originally planned to raise, at an interest rate coupon of 17.25 percent, its advisers said yesterday.

The seven-year bond was issued by way of a book-building with Standard Chartered Bank, local investment bank Chapel Hill Denham and FCMB Capital Markets as book runners. The offer was fully subscribed, they said in a statement.

Several banks will likely raise fresh capital this year or sell some assets to boost capital ratios, after low oil prices created dollar shortages and weakened the naira leading to a pile-up of non-performing loans.

Last November FCMB said it wanted to raise funds to strengthen its capital base but it halved the amount it planned to raise to 7.5 billion naira in debt after announcing a bond sale of up to 15 billion naira three months earlier.

Last year the lender closed some branches and slowed loan growth to conserve its capital, which was close to the regulatory limit of 15 percent of assets at mid-year.

Chief Executive Ladi Balogun said then it was undertaking the capital raising to provide an additional cushion.

Nigeria has been issuing bonds at yields below inflation, making it difficult for corporates to raise debt, as the government increases borrowing to try to spend its way out of the country's first recession in 25 years.

In January the government sold a five-year bond at 16.89 percent to raise 34.95 billion naira.

Annual inflation in Nigeria hit 18.55 percent in December, its 11th straight monthly rise to a more than 11-year high.

FCMB’s shares were down 3.82 percent on Friday at 1.28 naira, having gained 19 percent this year. Shares fell 35 percent in 2016.