Investors appear to have stronger appetite for corporate bonds as new issuers make successful debuts, raising more than their initial targets.
As against the lull in the initial public offering (IPO) segment of the primary equities market, debt issues by governments and companies have seen recurring success at the capital market.
In a major achievement for the housing sector and new issue segment of the capital market, FSDH Capital Limited, the investment banking and securities trading subsidiary of FSDH Group, demonstrated its capital raising credentials by leading the successful financial close of the N46 billion or $110.7 million Series 1 Fixed Rate Senior Unsecured Bond Issuance for Shelter Afrique, a first-time issuer.
The N46 billion maiden issuance is part of N200 billion or $481.3 million bond issuance programme by Shelter Afrique, a pan-African development finance institution dedicated to providing affordable and adequate housing finance across Africa.
The success of the first issuance is expected to encourage Shelter Afrique to speedily implement the remaining fund raising programme, a pattern already seen with many maiden issuers.
The dual tranche bond issuance was 60.7 per cent oversubscribed with the order book peaking at N64.3 billion or $154.6 million, enabling Shelter Afrique to exercise the ‘green shoe’ option and raise an additional N6 billion or $14.4 million more than the original N40 billion or $96.3 million plan.
FDSH Capital acted as the lead issuing house and played a critical role in ensuring that the transaction achieved successful financial close while ARM Securities Limited, FCMB Capital Markets Limited and United Capital PLC acted as joint issuing houses to the bond issuance.
Managing Director, FSDH Capital Limited, Mr. Tolu Osinibi, said it was pleasant to have advised Shelter Afrique on its successful debut bond issuance in Nigeria’s capital market.
He noted that Shelter Afrique continues to play a pivotal role in housing development across Africa and the success of the bond issuance would encourage other supranational financial institutions to tap Nigeria’s debt capital market for their naira funding needs.
“We thank the investor community for their support on the bond issuance. We also thank the board and management of Shelter Afrique for trusting us with this milestone transaction, and their commitment and dedication throughout the process,” Osinibi said.
He pointed out that the issuance by Shelter Afrique was the first naira-denominated bond issuance by a supranational organisation in over nine years and the over-subscription clearly reflected strong investor appetite in the Nigeria’s capital market.
Acting Managing Director, Shelter Afrique, Kingsley Muwowo said it was the first time Shelter Afrique was tapping the Nigerian debt capital market and the positive market reception was a clear indication of investor confidence in the organisation’s long-term value proposition for the housing market. “We would like to assure our investors that we shall put the proceeds of the bond issue into good use that will ensure that more value is created for them,” Muwowo said.
He noted that the issuance of the naira-denominated bonds reflects the organisation’s desire to focus on tailor-made, long-term funding solutions for the provision of affordable and adequate housing in Nigeria and across Africa.
The five-year Tranche A bonds priced at 13 per cent and the seven-year Tranche B bonds priced at 13.25 per cent. On the back of an AA rating from GCR Ratings and an A+ rating from Agusto & Co, the bond issuance attracted participation from a diverse range of institutional investors, including pension funds, banks, and insurance companies.
Muwowo said the tenors of the bonds aligned with the institution’s housing finance strategy and long-term plans in Nigeria adding that Shelter Afrique would use the bond proceeds to fund mass housing development by tier 1 real estate developers, and to provide lines of credit.
Other professional parties include Aluko & Oyebode and Banwo & Ighodalo who acted as Solicitors to the Issue/Issuer and Solicitors to the Trustee respectively, United Capital Trustees Limited and CardinalStone Registrars Limited acted as the Trustee and Registrar respectively. The Receiving Banks include FSDH Merchant Bank Limited, Stanbic IBTC PLC and United Bank for Africa PLC.
Shelter Afrique was established by African governments to address the need for a sustainable housing delivery system and related infrastructure projects in Africa. Its shareholders include 44 African countries, the African Development Bank, the African Re-Insurance Corporation, and Fonds de Solidarité Africain (FSA).
Source : The Nation