FBN Capital concludes C’ River’s bond issuance offer
The seven-year tenured bonds, with maturity due in 2022, were issued via a book building process by FBN Capital Limited, following its appointment as the lead issuing house by the state government in May.
The state, in line with its mandate to develop infrastructure, had embarked on several projects, including roads, water and health facilities, which were financed through bank loans.
The proceeds from the issue were therefore earmarked for refinancing the state’s outstanding obligation to the lending banks.
The bonds, which were offered at 17 per cent coupon rate (paid semi-yearly), proffered a cheaper financing option to the state.
FBN Capital, as lead issuing house, led the league of the issuing houses to underwrite the transaction to the tune of N6.25 billion on a standby basis.
The bond offer was secured by an Irrevocable Standing Payment Order (ISPO), issued by the Federal Ministry of Finance as a first line charge upon and payable out of the statutory allocation of the state.
By this order, a sinking fund account was created and managed by the trustees to the issue, from which bondholders’ obligation (interest and principal) would be repaid.
Speaking on the transaction, the Deputy Managing Director of FBN Capital, Taiwo Okeowo, stated that “despite the market volatility which characterised the bond issuance period, the transaction was closed at a favourable pricing mark, raising N1.75 billion over the underwritten sum.