FBN Capital Completes Cross River States Bond Issuance Offer

FBN Capital Limited has announced the successful conclusion of the Series 1 Bond Issuance offer for the Cross River State Government, under its N40 billion bond issuance program.  The 7-year tenured Bonds with maturity due in 2022 were issued via a Book Building process by FBN Capital Limited, following its appointment as the Lead Issuing House by the State Government in May 2015.

The State in line with its mandate to develop infrastructure, had embarked on several projects including road, water and health facilities which were financed through bank loans.  The proceeds from the Issue were therefore earmarked for refinancing the State’s outstanding obligation to the lending banks. The Bonds which were offered at 17% coupon rate (paid semi-annually) proffered a cheaper financing option to the State.

FBN Capital as Lead Issuing House led the league of the Issuing Houses to underwrite the transaction to the tune of N6.25billion on a standby basis. The Bond Offer was secured by an Irrevocable Standing Payment Order (ISPO) issued by the Federal Ministry of Finance as a first line charge upon and payable out of the Statutory Allocation of the State. By this order a Sinking Fund account was created and managed by the Trustees to the Issue from which bondholders’ obligation (interest and principal) would be repaid.

Speaking on the transaction, Mr Taiwo Okeowo, Deputy Managing Director of FBN Capital stated, “Despite the market volatility which characterized the bond issuance period, the transaction was closed at a favorable pricing mark, raising N1.75billion over the underwritten sum. FBN Capital leveraged on its distribution relationships to obtain commitment for the transaction, and on conclusion of the offer a total of N8billion naira was raised, significantly reducing Cross River State’s outstanding loans to banks and lowering the service cost for the loans”.

The Issuer was assigned a ‘BBB” rating while the Issue was assigned an ‘A-’, both by Global Credit Rating Co. Limited following their financial due diligence.

FBN Capital was recognized as the Best Investment Bank in Nigeria 2015 for the fourth consecutive year by Global Finance Magazine. The firm also received the World Finance Banking Awards as the Best Investment Bank in Nigeria 2014, and the EMEA Finance African Banking Awards as the Best Local Investment Bank in 2013.