The Asset Management Corporation of Nigeria will pay N1.7tn to holders of its bonds by December 2013, the Governor, Central Bank of Nigeria, Mr. Lamido Sanusi, has said.

Sanusi stated this in Lagos on Thursday at the National Risk Management Conference, adding that bad debt bank would owe nobody apart from the CBN after December.

He said, “AMCON has bonds with face value of N5.7tn. CBN holds N3.6tn while others belong to other public and private investors. AMCON will pay N1.7tn to private and public holders of its bonds by December. The remaining which belongs to the CBN will be refinanced and restructured.”

Sanusi also said that Nigerians should not expect low interest rate at a time of increased government spending.

He said, “Everywhere in the world, if you have an election, that is when government spends more because at that time, you will have political office holders wanting to deliver dividends, they will want to show reasons why they should be re-elected.

“So, central bank governors all over the world know that election cycles are very difficult for monetary policy. The point I am making is that if there is increased spending, what is likely going to happen will be higher interest rate.

 AMCON said last weekend that due to the enormous progress made in its debt recovery and restructuring, as well as the “extraordinary cooperation of the Deposit Money Banks in fulfilling their commitments to the Financial Sector Resolution Fund- the Sinking Fund; AMCON is now able to retire about N2tn of its bonds during 2013 and 2014 and refinance approximately N3.6tn.”

This, according to the corporation, will enable it to reduce its bond liabilities by 35 per cent, which “is well ahead of schedule”.

The corporation had issued a three-year tenured zero coupon bonds with a principal amount of N3.9tn and a face value of N5.7tn, which had enabled it to fulfil its mandate of acquiring Eligible Bank Assets and also in recapitalising the banking system. This helped to restore stability in the financial system.

It said, “AMCON intends to repay all holders of Series 1 to Series 4 in December 2013, through the payment of cash and liquidity status qualifying instruments held by the corporation.

“The redemption and refinancing will be in a manner consistent with efficient and effective macroeconomic stability in general and ensuring no monetary policy dislocation.

“AMCON intends to refinance N3.6tn of bonds in a bilateral agreement solely with the CBN on mutually agreed terms. There will consequently be no other public or private holders of AMCON bonds.

“Since the source of repayment will be AMCON recoveries and the sinking fund, the CBN which regulates and supervises all contributing institutions, including AMCON, is well placed to ensure that AMCON obtains maximum recoveries and that all banks continue to contribute as agreed.”

Source:Punch (by Ademola Alawiye)