Nigerian Bank’s $500 Million Eurobond
Guaranty Trust Bank of Nigeria is seeking to raise dollar-denominated debt through a $500 million Eurobond. A report on the news agency Reuters suggests that the 5-year bond will be issued at 7.75% yield and the lead managers will be JPMorgan and Morgan Stanley.
The bank, known as “GT Bank”, is listed on the London and the Nigerian stock exchanges. It has a market capitalization (total value of the shares listed) of $3 billion.
If all goes well with the new bond issue it could it could eventually issue a total of $2 billion in debt, say some commentators.
Broker Exotix and Standard Bank Research in their comments on the bond point to the diversified loan portfolio and conservative management of the bank.
The offered yield compares well to the $500 million Nigerian Government 10-year bond issued in January 2011 which was 2.5 times oversubscribed, according to an earlier story on Reuters. The original issue was at a yield of 7% but the bond traded almost flat until the April presidential elections. Since then it has climbed to a price representing a 6.1% yield, showing that the market is upbeat about improving economic and political prospects going forward.
Today (16 May) Human Rights Watch reported that 800 Nigerians died last month in rioting and violence after the elections but overall political stability does not seem to be under threat. According to statistics from the IMF, Nigeria’s economy measured by Gross Domestic Product (GDP) grew by 8.9% average each year over the period 2001-2010 and is forecast to continue with annual average growth of 6.8% forecast for 2011-2015.
Standard Bank Research praises the way the bank is run and how well it weathered a storm that swept through Nigeria’s banking sector in 2009, when the central bank took over several leading banks and fired their CEOs. Standard Bank’s research team comments: “We consider the new Notes due 2016 to be one of the best emerging market bank securities in our universe. GTB is one of the largest banks in Nigeria. It is well-capitalized and highly profitable operating in a market that is hugely underpenetrated. Liquidity is strong. Management is experienced and sophisticated and very importantly to us, experienced in successfully negotiating a banking crisis. During the 2009 Banking crisis in Nigeria, GTB was resilient and quite successfully underwent increased regulatory scrutiny.”Continued on the next page