Fidelity Bank says it plans to use proceeds of the 10-year fixed-rate unsecured subordinated bond it raised at an 8.5 per cent coupon rate due in 2031 to finance retail infrastructure and boost its lending to small businesses in the country.
The bank had at the weekend announced that it raised N41.21bn through the 10-year bond under its registered N100bn bond issuance programme.
According to the Managing Director and Chief Executive, Mrs. Nneka Onyeali-Ikpe, proceeds from the transaction would be utilised to support growth in the issuer’s risk assets in Small and Medium Enterprises and retail business as well as investments in technology and retail infrastructure.
Onyeali-Ikpe, while noting that this was in line with the bank’s Tier I aspirations, said Fidelity’s business fundamentals had remained strong despite the challenging economic environment occasioned by the Coronavirus Disease and the attendant recession.
“The successful bond issuance highlights the confidence in the Fidelity brand, as well as our capability to expand our funding sources and deliver innovative financial services to our esteemed customers,” she added.
Speaking on the significance and success of the bond issuance, the Chairman, Mustapha Chike-Obi, said that the bond issuance further demonstrated the bank’s confidence in Nigeria’s debt market.
“It also validates the continued investor confidence in our corporate strategy and aspirations, strong corporate governance structure as well as solid and stable executive management team with robust history of superior financial performance and returns,” Chike-Obi said.
The bank, in a statement, noted that the bond issuance was fully subscribed, given that total investor interest and commitment in the bonds were N56.6bn.
It stated, “The transaction is a landmark achievement in the Nigerian domestic debt market for being the largest corporate bonds ever issued by a Nigerian bank, including the deposit money banks and merchant banks etc.
“In December, the bank had announced plans to issue fixed income securities with 10-year tenor to support the growth and development of SMEs, retail business as well as its technology infrastructure.”
It added that the bonds were unsecured and subordinated, which would qualify as Tier II Capital in line with the Central Bank of Nigeria’s guidance notes on regulatory capital for commercial banks in Nigeria.
The issue, which was assigned a rating of A- by Agusto, and A by Datapro, would be listed on both the Nigerian Stock Exchange and FMDQ Securities Exchange Limited.