In order to take advantage of the favourable global market conditions, Guaranty Trust Bank Plc (GTBank) has concluded plans to issue a new five-year $500 million Eurobond.
This emerged just as Access Bank Plc disclosed that it recently raised $100 million in seven-year international bilateral debt priced below its Eurobond yield of 7.25 percent.
The proposed fixed income instrument by GTBank will be the bank’s third external issuance since 2007.
A report obtained by THISDAY indicated the proceeds from the Eurobond would be used to finance the power sector and potentially oil and gas and other infrastructure projects as well as the bank’s expansion into sub-Saharan Africa.
Commenting on the development, the Emerging Markets Strategist at Standard Bank, Mr. Samir Gadio, put the fair value of the proposed instrument at about six per cent.
“Interestingly, the bank has another outstanding Eurobond due in 2016 ($500 million) which currently trades at 4.85 per cent, the equivalent of a spread over UST of 431 basis.
“GTB is coming back to global capital markets amid a broadly constructive risk tone, as illustrated by relatively contained US Treasury rates (despite a small pick-up in recent days) and on the back of a rally in emerging market Eurobonds in October. With the Fed now unlikely to start tapering its quantitative easing programme until March 2014, there is a clear incentive for emerging market issuers to lock in low Eurobond rates,” Gadio added.
Shedding more light on the $100 million it raised, the Group Managing Director/Chief Executive Officer, Access Bank, Mr. Aigboje Aig-Imokhuede, said the fund would bolster the bank’s bolster capital base.
The Access Bank boss who revealed this in a chat with Reuters said the tier II debt would help to increase the bank's capital adequacy ratio to 20 per cent by year-end, up from 18 percent as at its nine-month period to September.
The bank would not need to issue any equity, he added.
Aig-Imokhuede will retire as chief executive of the bank at the end of the year.