A Review of the Nigerian Energy Industry

‘19 firms issued N225.38bn bonds in eight years’

NSE26 August 2014, Lagos – Between 2005 and 2013, a total of N225.38bn was raised from the bond market by 19 Nigerian companies, the Director-General, Debt Management Office, Mr. Abraham Nwankwo, has said.

Nwankwo, who stated this during a chat with journalists in Abuja, said the companies took advantage of the success recorded in the issuance of Nigerian Sovereign Eurobonds to raise the funds.

The DG said for the first time in the nation’s history, the private sector had been able to access long-term funds from both the domestic and international capital markets.

The corporate bonds were issued at a coupon rate of between 1.5 per cent and 17.25 per cent with a maturity period ranging from three to eight years.

Nwankwo stated that the domestic bond market had been meticulously developed with appropriate products and institutional frameworks so that long-term debt capital with tenor of up to 20 years could now be easily sourced in Nigeria.

A breakdown of the N225.38bn bonds issued by the companies revealed that United Bank for Africa Plc issued the highest amount, with N55bn.

Flour Mills of Nigeria Plc followed with N37.5bn.The company’s bond issued in 2010 at an interest rate of 12 per cent has a repayment period of five years.

Others are Federal Mortgage Bank of Nigeria, which issued N30.56bn; Access Bank Plc, N1.9bn; Crusader Nigeria Plc, N4bn; Custodian and Allied Insurance Plc, N1.17bn; and Guaranty Trust Bank, N13.17bn.

Similarly, C&I Leasing issued N4.5bn; NGC Sterile, N2bn; UAC Property Development Company Plc, N15bn; Chellarams Plc, N2.04bn; and Dana Group, N8.01bn.

The rest are Sterling Bank Plc, N7.5bn; Lafarge Cement WAPCO Nigeria Plc, N11.88bn; Nigerian Aviation Handling Company Plc, N17.05bn; Tower Funding, N4.63bn; Crusader Insurance, N2.26bn; First Security Discount House, N5.53bn; and La Casera Company, N3bn.

Nwankwo said the bonds were used to fund long-term real sector projects in key sectors of the economy such as agriculture, manufacturing, housing, minerals exploration and processing, and infrastructure.

He added that this would help to diversify the economy thus leading to sustainable economic growth, employment generation and poverty reduction.

The DMO boss said, “For the first time in Nigeria’s economic history, the private sector has been enabled to access long-term funds from both the domestic and international capital markets

“The successful issuances of three Nigerian Sovereign Eurobonds in the International Capital Market – one in 2011 and two in 2013 – have opened the window for Nigeria’s private sector to raise required foreign currency funds.

“They are now able to fund long-term real sector projects (agriculture, manufacturing, housing, mineral exploration and processing, infrastructure), for diversified and sustainable economic growth towards employment generation and poverty reduction.”

According to Nwankwo, the agency is focused on ensuring that the private sector now takes the lead in raising funds for development both locally and internationally to finance most of the projects.



– The Punch

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