By InvestAdvocate
Lagos (INVESTADVOCATE)-Nigeria’s lender, Fidelity Bank Plc last week listed a total of N30 billion 7 years fixed rate 16.48 percent subordinated unsecured bonds due 2022 issued by the bank.
A statement from the lender said all the investors/bondholders’ Central Securities Clearing System (CSCS ) account have been credited with the number of units of bonds each one invested in and trading has now commenced in earnest in the secondary market.
According to Fidelity Bank, by this listing, its quest to raise fresh capital to expand its support to the Small and Medium Enterprise (SME) segment of the country’s monolithic economy is headed in the right direction. “The funds generated would also count as tier II capital in consonance with the guidelines of Basel II,” the statement added.
Nnamdi Okonkwo, managing director/chief executive officer (MD/CEO) of Fidelity Bank affirmed the bank has already earmarked 80 percent of the proceeds of the bond for SME financing – a move Okonkwo insists is in recognition of the importance of SMEs as the engine room of the economy.
“We are a very strong SME bank. So, we have raised this bond to channel it to our SME banking and to improve our retail infrastructure,” he said.
He says the growth trajectory the bank witnessed in the SME sector last year is a pointer to the potentials of the sector adding “if we properly provide the right infrastructure to that segment, it should be the new frontier to help us face the difficult environment that we are operating in,” Okonkwo affirmed.
According to him, following the conclusion of the issuance of the bonds and its subsequent listing, Fidelity Bank will reach out more in the SME banking space. “The remaining 20 percent of the net proceeds will be used in financing retail lending and retail infrastructure, to the tune of 15 percent and 5 percent respectively,” he added.
The lender in earlier May 2015 issued N30 billion, 16.48 percent fixed rate domestic-currency-denominated bonds. The bond is a 7-year fixed rate subordinated unsecured debt instrument due in 2022. The bonds which are callable with a call protection period of 5 years and issued at par, qualify as securities because Pension Fund Assets could be invested under the Pensions Reforms Act 2014.
The implication of this is that the bonds also qualify as securities in which Trustees can invest under the Trustees Investments Act, Cap T22, LFN, 2004. The bond issuance was fully underwritten and the basis of allotment was approved by the Securities and Exchange Commission (SEC) in June 2015.
Shares of Fidelity Bank at the close of trading on the Nigerian bourse on Monday declined 4.48 percent to N1.28 from N1.34; losing 0.06 kobo per share.
