Zenith Bank to list Tranche-2 of Term Notes on Irish Stock Exchange

by Iheanyi Nwachukwu

May 15, 2017 | 12:15 am
  |     |     |   Start Conversation

Nigeria’s tier-1 lender, Zenith Bank Plc has notified investors of its intention to raise $500million in its upcoming issuance of five-year Senior Unsecured Notes.

This second tranche of the Notes is under Zenith Bank’s $1 billion Global Medium Term Note (GMTN) Programme established in 2014. The bank had raised $500million in the first tranche of the Notes.

Similar to the first tranche of the Notes, Zenith Bank Plc intends to list this second tranche Notes on the Irish Stock

Exchange (ISE) and admitted to trading on its regulated market.

As was done with the first tranche Notes, the bank intends to issue the second tranche Notes directly, but will retain the flexibility to issue through an offshore special purpose vehicle (SPV) where market conditions require and allow for same.

Zenith Bank intends to utilise the net proceeds of this second tranche Notes for its general banking purposes, according to a statement signed by its Company Secretary, Michael Osilama sent to the Nigerian Stock Exchange (NSE) ahead of the bank’s planned investor meetings in Europe and the United States of America with respect to the transaction.

The net proceeds from the issue of the second tranche notes will be paid into the bank’s foreign currency domiciliary account and may be converted into naira or retained in foreign currency.

“The bank does not intend to obtain a certificate of capital importation (CCI) in respect of the proceeds of the notes that are not converted into naira as a CCI is only issued in respect of capital imported into Nigeria and converted into naira,” the bank said in the note at the NSE.

“Therefore, the bank will make principal repayment and interest payments on the notes from its foreign currency reserves, as it will not be able to obtain access to the Nigerian foreign exchange market for the purpose of making such payments.

“However, in the event that the bank does not have sufficient foreign currency reserves to meet the principal and interest payments due on the notes, the bank would be required to obtain the approval of the Central Bank of Nigeria (CBN) to enable it to access the official foreign exchange market”.

Fitch Ratings assigned the upcoming issuance of $500million five-year senior unsecured notes an expected rating of ‘B+(EXP)’. The Recovery Rating is ‘RR4’, which denotes average recovery prospects in the event of default.

Fitch said the assignment of the final rating is contingent on the receipt of final documents conforming to the information received to date, while stating the key rating drivers -the senior unsecured notes are rated in line with Zenith’s Long-Term Issuer Default Rating (IDR) of ‘B+’.

In the agency’s view, the likelihood of default on these notes reflects the likelihood of default of the bank.

Zenith Bank’s recently released first-quarter (Q1) 2017 result shows the bank’s commitment to continuously drive growth in both top and bottom line earnings, reiterating the management’s effort to improving shareholder value.

In Q1 to March 31, 2017, the bank earned N147.7billion, an increase of 49percent when compared with N99.4billion in Q1’2016; while its profit after tax in the first-quarter of 2017 rose by 41 percent to N37.49billion from N26.57billion in Q1’16.

Fitch said Zenith’s IDR is driven by its standalone creditworthiness, as defined by its Viability Rating (VR) of ‘b+’.

Zenith’s ratings are among the highest assigned by Fitch to a Nigerian bank. This reflects its sound company profile and management, solid capital base and strong through-the-cycle performance.
Nigeria’s 11 electricity distribution companies were granted franchise areas that cover sometimes three or more states. In Lagos alone, Eko DisCo and Ikeja Electric are saddled with the task of distributing power to over 20 million people, a task they have proven incapable of fulfilling, even as they fight off perceived threats to their franchise areas.

“I think the DISCOs should be willing to be more flexible for the sake of national interest. Their focus should be on servicing their already connected customers optimally. They should not eye unserved or underserved areas, so that millions of dollars of off-grid investment can flow into the country.

“These investments will reduce the pressure on the grid, allowing them to be more efficient and maybe one day, even profitable. In the long run, I am a believer in net metering and what it can do for our discos.

“They should let the investment come and then seek to collaborate with these investors in the future and not in the “asset take-over model” that is stated in the current mini-grid law. Off-grid sites could become embedded generation sites in the future and that should be the long term view of the DisCos,” says Aigbokhan.


Iheanyi Nwachukwu



by Iheanyi Nwachukwu

May 15, 2017 | 12:15 am
  |     |     |   Start Conversation

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