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First Bank of Nigeria Limited, has concluded a debt capital raising exercise in the international markets through a US $300 Million subordinated Tier 2 transaction.
Its Head, Marketing and Corporate Communications, Folake Ani Mumuney, who confirmed this, said that the proceeds from the capital mop up would be used by the bank for general banking purposes.
According to her, in line with First Bank’s capital management strategy, the institution had chosen this route to ensure that it remained well capitalised with an improved total capital adequacy ratio (CAR) of 22.5 per cent up from 20.1 per cent as at the end of March 2013 and supported loan growth over the near term, adding that in addition, the transaction further diversified and extended the maturity of the bank’s foreign currency funding.
The Tier 2 capital transaction, she explained, has a seven-year maturity and callable on the 5th anniversary of the issuance date, pointing out that the issue, carries an initial coupon of 8.250 per cent on the nominal par amount, which resets at the call date to a new fixed rate (no step-up) until maturity, while the Tier 2 capital treatment amortises over the last five years prior to maturity.
The successful offering, she noted, was achieved within the context of volatile debt capital markets, especially for Emerging Market borrowers.
This transaction is First Bank’s second Tier 2 capital raise, following on its debut 2007 US $175 Million Tier 2 capital raise which carried a 9.750% coupon rate and which was called by the institution in 2012. This makes First Bank the only Nigerian banking institution to carry out not only one, but two consecutive subordinated Tier 2 capital raising transactions in the international debt markets, she said.
FBN Capital, the investment banking and asset management subsidiary of FBN Holdings Plc, served as financial advisers with Citigroup and Goldman Sachs International also acting as advisers and Joint Lead Managers to First Bank on the transaction.
