Less than one month after the Nigerian Stock Exchange (NSE) admitted the listing of Guaranty Trust Bank(GTB) unsecured non-convertible bond to the daily official list, the value of corporate bond has increased by 145.2 per cent.
GTB plc made history on March 17, 2010 when 13,165,000 unit of its fixed rate senior unsecured non-convertible Bond valued at N13.165 billion and issued through a Book Building process was listed on the Nigerian Stock Exchange (NSE). This is the first bond to be listed through this process.
Book Building 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.According to information obtained from the NSE, the Niger State sub-national bond issued within the period has also increased in value by 7.02 per cent.
The two bonds were admitted on the daily official list on March 17, 2010. The 13,165,000 units of fixed rate senior unsecured non-convertible bonds 2014 (Series 1) in favour of Guaranty Trust Bank (GTB)Plc and the 6, 000,000 unit fixed rate redeemable development bond 2009/2014 in favour of Niger State Government were admitted at a price of N1,000 each.
The NSE'S Assistant General Manager/Head Corporate Communications Department, Sola Oni, explained, recently, that the GTB 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 semi annual interest payment fixed for June 18 and December 18.
Officials of The Nigerian Stock Exchange said 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.
The Exchange has 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".