Zenith Bank announced during the week that it planned to raise about $500 million in the second tranche of its Global Medium Term Note Programme (GMT). A summary of this issue can be found in this article.
While this is the second tranche in a $ 1 billion GMT Programme launched in 2014, the first tranche is currently running and has been in the bank’s books for about two years now. The bank, in its 2016 annual report provided an insight into how that loan is performing;
- At the time when Zenith Bank took the loan the exchange rate was around N157/$1 which will suggest that the value was N78 billion.
- However, by the end of 2014, the CBN devalued the naira leading the bank to report the balance at N92.9 billion in its annual report
- The bank also reported the balance at about N98.9 billion in 2015, reflecting the second round of devaluation by the CBN.
- The value on the loan on the bank’s balance sheet has now ballooned to N153.4 billion reflecting yet another devaluation in 2016.
- As part of the terms of the deal, Zenith Bank is expected to make a bullet repayment of the principal by April 22, 2019, so it is not under a pressure of installment payments.
- The loans are also are a coupon of 6.25%, payable semiannually with bullet (yield as at end of 2016 was 6.5%).
- Zenith Bank claims that it has never defaulted on the interest
- Zenith Bank also has another N263.1 billion in foreign loan commitments with other foreign lenders.
- Zenith Bank has about N769 billion in foreign currency denominated risk assets (loans to borrowers)