United Bank for Africa (UBA) Plc’s N30.5bn bond was yesterday listed on the Nigerian Stock Exchange (NSE) and Nigeria’s premier debt capital Securities Exchange, the Financial Market Dealers Quotation, Over-the-Counter (FMDQ-OTC) market.
The bank said in a statement that the listing on the NSE would provide opportunity for retail investors to take advantage of the fixed return on the investment grade notes, through the primary market whilst listing on the FMDQ will provide a secondary market platform for institutional and foreign investors to trade the UBA Bond.
The UBA Bond is the first corporate bond to be admitted on the FMDQ platform and the first of its kind on a fixed income OTC in Africa.
By listing its bonds on the NSE and FMDQ retail investors can buy those bond through their stockbrokers and trade it just like they trade stocks. The bond prices are quoted everyday the way stock prices are quoted making it easy for retain investors to buy and sell the bond whenever they like.
The only set back with corporate bonds or indeed any bonds in Nigeria is liquidity. For a retail investor with less than N10million it might be difficult for you to get a buyer for your bond. For example, you can buy a stock for just N100,000 and then find a buyer to sell it to whenever you like. However, with corporate bonds buyers typically look for sellers who have bond units worth millions of naira making it an pseudo sophisticated market for pension funds, mutual funds and other structured retail investors.
Nairametrics hopes that with more listings of corporate bonds as well as efforts to intensify financial literacy amongst retail investors, the bonds markets can start to create more liquidity in the demand and supply side of the market.
