Ecobank Transnational Incorporated has, on Thursday April 11th, 2019, sold $450 million worth of Eurobonds at yields that rank among the highest from emerging markets this year.
The bank issued five-year senior unsecured notes priced at 9.75 percent, according to Renaissance Capital, which is one of the arrangers.
Nairametrics understands that the funding will help the lender to meet its general corporate obligations, including the refinancing of a portion of debt it owes to other banks.
According to Bloomberg, the yields are about the juiciest since Ecuador sold $1 billion of 10-year sovereign debt at 10.75 percent in January.
Yields on the securities have dropped to 9 percent as sentiment toward emerging markets improved and the Government secured a $4.2 billion loan package from the International Monetary Fund (IMF).
Recall that Ecobank had, in 2018, raised $200 million in loans. The credit facilities are due for repayment in November this year.
Breaking the hiatus
Nairametrics learnt that the Eurobonds’ sale is the first debt sale from a lender with shares listed on the Nigerian Stock Exchange (NSE) in 18 months. As a result of this, Ecobank is the only Nigerian-listed lender that has sold Eurobonds since October 2017, when Fidelity Bank Plc issued $400 million of five-year securities.
Eurobond is denominated in a currency other than the home currency of the country or market in which it is issued. These bonds are frequently grouped together by the currency in which they are denominated, such as eurodollar or euroyen bonds.
Issuance is usually handled by an international syndicate of financial institutions on behalf of the borrower, one of which may underwrite the bond, thus guaranteeing purchase of the entire issue.
The popularity of eurobonds as a financing tool reflects their high degree of flexibility, even as they offer issuers the ability to choose the country of issuance based on the regulatory market, interest rates and depth of the market.
Eurobonds are also attractive to investors because they usually have small par values and high liquidity.