ByAdemola Alawiye

Analysts have said that the zero coupon bonds issued by the Asset Management Corporation of Nigeria will boost the real sector of the economy.

They said that the bonds would boost the banks liquidity, thereby creating more funds to be lent to the real sector.

AMCON on Wednesday completed a N1.7tn ($11bn) bond issue, attracting yields significantly below equivalent government treasuries.

A financial analyst with GTI Capital Limited, Mr. Tunde Oyekunle, noted that the bonds would increase lending to the real sector.

Oyekunle said, “it’s a good development for the banks. With this development, the banks are expected to lend more to investors, corporate bodies and the real sector. These set of bonds are different because the previous bonds helped the banks books but did not increase their liquidity. This type will increase their liquidity and boost lending to other sectors.”

The Managing Director, Sotice Investment Comapany Limited, Mr. Adedayo Toluwase, said that the bonds would achieve the monetary authorities goal of boosting the real sector by lending more to it.

He said, “The Central Bank of Nigeria has been calling on banks to lend more to the real sector. This development will create such avenue because AMCON will have more funds which it will extend to banks. The banks, if they want to help the economy, will devote more funds to the real sector.”

Oyekunle further said that the bonds would help the bond market.

He said, “It is good for the bond market. Investors in the market will have opportunities to buy other bonds apart from the FGN bonds. Some people will also prefer the AMCON bonds because it is a specialised bond.”

AMCON issued a three-year zero coupon bond in three tranches. The first N1.15tn tranch, which attracted a 10.125 per cent yield was issued to be exchanged for AMCON consideration bonds. It was launched in December to absorb non-performing loans from 21 Nigerian banks.

The second N20.7bn tranche was issued via a book building, which opened on Friday and was oversubscribed, while the third N535bn tranche was issued to acquire additional non-performing loans from 22 banks. Both tranches were priced with an 11.8 per cent yield.

Source: Punch