Fidelity Bank targets N50bn bond sale in Q4

Fidelity Bank Plc says it plans to issue up to 50bn ($131.3m) in local bonds by the fourth quarter to re-finance existing debt as yields fall.

Bond yields have declined on the local debt market after an oil price crash triggered by the COVID-19 pandemic caused foreign investors to dump naira assets, leaving money markets awash with liquidity.

The new issue will be made to redeem an existing 30bn bond issued at 16.48 per cent, said Chief Operations and Information Officer, Gbolahan Joshua.

Debt market yields have dropped from a high of 18 per cent three years ago and yields on the one-year treasury bill are quoted under five per cent.

The mid-tier lender said it expected to see a 15 per cent drop in profit this year compared to 2019, citing the impact of the pandemic.

It said profit before tax had increased by 21.9 per cent to 12bn in the half year.

Fidelity said income declined in the second quarter due to a downward review of lending rates on loans backed by development finance institutions and an economic slowdown.

The bank is looking to raise funds at a cheaper rate than the 16.5 per cent it paid for a similar issuance in 2015, according to Joshua.

Yields on tNigeria’s debt have dropped since its central bank last year barred individuals and non-bank institutions from buying short-term securities in its open market operations.

The yield on the government’s benchmark bond due in 2049 dropped to 10 per cent on Tuesday, compared to 14.8 per cent when it was issued in April last year.

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