GT Bank's 13.5% Fixed Rate Senior Unsecured Non-Convertible Bond valued at N13.165 billion was last week listed on The Nigerian Stock Exchange (NSE). The bond which was issued through a Book Building process is a capital raising process that aids price and demand discovery. It is a process used for marketing a public offer of securities.
The issue is to enable the GT Bank access long-term capital to finance medium-to-long term projects, particularly developmental and infrastructural projects in the key sectors of the economy. This is the first bond listed through this process .According to the press statement made available to Business Hallmark by the NSE,the bond, which is the first tranche of the bank's N200 billion Debt Issuance Programme has a five-year tenor with 13.5 percent Coupon, and semiannual interest payment fixed for June 18 and December 18.
Commenting on the uniqueness of the bond, an Executive Director of WTSC Financial Services Limited, Joint Issuing House to the offer, Mr. Afolabi Afolayan, said the bond was assigned an “Aa-“ rating by Agusto and Company Limited. The lead Issuing House was GTB Asset Management Limited while FBN Capital Limited and WSTC Financial Services Limited were the Joint Issuing Houses.
Afolayan explained that GT Bank's decision to give back to investors withholding tax charged on the Bond would increase the yield to 15 percent from 13.5 percent earlier promised investors. He also underscored the potential liquidity of the bond as one of its unique characteristics, saying this would enhance demand for the instrument on The Nigerian Stock Exchange.
The statement which was signed by NSE's spokesman Mr. Sola Oni, explained that officials of The Nigerian Stock Exchange assured The Exchange's Automated Trading System (ATS) and Central Securities Clearing System (CSCS) Limited stand to provide seamless trading, settlement and delivery on the bond like other listed financial instruments.
Business Hallmark recalls the Exchange had also reduced the transaction charges in bond as part of the incentives to make investment in bonds very attractive. Many companies are expected to take advantage of Book Building process to raise fund through the capital market. The process does not only reveal the demand and price investors are willing to pay, but is also highly cost-effective.
From the early 1990's, the bank has tirelessly set the pace for other Nigerian financial institutions in terms of service quality, product functionality and excellent customer service delivery. After listing at the stock exchange in 1996, it was also the first Nigerian financial institution to undertake US$350 million S Eurobond issue and a US$750 million Global Depository Receipts (GDR) offer. The listing of the GDRs on the London Stock Exchange in July 2007 made the bank the first Nigerian company and African Bank to attain such a landmark achievement. And at the price of N19.00 per share, it stock is the highest valued in the banking sub-sector