By Stanley Opara with agency report

Tuesday, 1 Feb 2011

The Asset Management Corporation of Nigeria said on Monday that it was delaying by a month the issue of N1.5tn ($10bn) in tradeable bonds. It, however, said that it was still on track to absorb all bad bank loans on time.

AMCON was set up last year to absorb bad bank loans and exchange them for government bonds in order to rebuild banks’ balance sheets after a $620bn bail-out in 2009.

AMCON had planned to replace N1.03tn worth of consideration bonds issued to 21 lenders in December with fully tradeable bonds by January 31, but the corporation’s Chief Executive Officer, Mr. Mustapha Chike-Obi, according to Reuters, said the process was taking longer than expected.

“We have had to delay the bond issue because there are a lot of procedural issues. We are seeking some waivers from the ministry of finance… so we have pushed it back to February 28,” he said in a telephone interview.

But he said AMCON’s timetable – absorbing bad loans by the end of March and resolving the banking crisis by the end of June – was still on track.

AMCON was seeking the finance ministry and the Debt Management Office’s waivers to enable it to issue tradeable bonds as a new company and was also seeking an exemption from the Securities and Exchange Commission’s registration fees, Chike-Obi said.

He said AMCON still planned to issue an extra N500bn to soak up remaining non-performing loans from other lenders when retiring the consideration bonds in February, as originally announced.

AMCON issued three-year zero coupon consideration bonds to 21 banks in December in exchange for non-performing loans. Margin loans were 40 per cent of the total.

“This will create some delays but we will catch up with other things that we need to do. We are trying to make sure that we meet the deadline by the end of the second quarter to resolve all the banking issues,” Chike-Obi said.

The corporation, during the issuance of the zero coupon initial consideration bonds due in 2013, had said it was satisfied that the information provided by the eligible financial institutions “is a true and fair representation of the respective eligible bank assets on the institutions, records as at November 15, 2010.”

It said, “AMCON has concluded arrangements to issue initial consideration bonds to the eligible financial institutions in consideration for AMCON‘s acquisition of the eligible bank assets from eligible financial institutions by acquiring almost all non-performing loans in the intervened banks and margin-related non-performing loans from the non-intervened banks.”

Source: Punch