Renaissance Capital Sees More Eurobonds Raise for Nigeria, Banks
Following a number of successful foreign currency borrowings in 2021, Renaissance Capital Limited said Eurobond markets will form parts of the funding mix for Nigeria, corporates and local banks going into 2022.
The frontier and emerging market investment banking firm revealed this expectation in a recent virtual press briefing with journalists and analysts.
Recently, Nigeria and corporates including local banks made a fresh foray into the international debt capital to shore up financing needs. Nigeria also accessed $4 billion from the Eurobond market in 2021.
While speaking, RenCap said Eurobond markets will form a key part of funding plan in the coming year, noting that Nigeria will also require local and international funding to close the budget gap.
Samuel Sule, Acting Chief Executive, Nigeria, Renaissance Capital told the conference that capital markets in 2021 were thematically a year for stabilisation, refinancing and positioning for future sustainable growth.
In foreign currency debt markets across West Africa, transaction flow commenced with a US$300 million 5-year Eurobond issuance for Ecobank Nigeria, RenCap Chief said at the virtual briefing.
The sum raised by Ecobank was considered as the lowest coupon for an outstanding Nigerian bank Eurobond at the time of issue. RenCap said this was followed by another US$350 million 10-year Tier 2 Sustainability Bond for Ecobank Transnational Incorporated.
It recognised this as the first sustainable bank Eurobond from an African bank, which was followed by a US$500 million Additional Tier 1 Eurobond for Access Bank, noted to be the first Additional Tier 1 bond from a West African bank and a US$300 million 5-year Eurobond and tender offer for United Bank for Africa.
Read more>>>Access Bank Raises Additional $500m Eurobond at 9.125%
Sule said RenCap partnered with issuers on debut and follow-on issues in the local currency debt markets leading landmark transactions including N13.729 billion debut bond issuance for Emzor Pharmaceutical Industries.
Discussing the investment firm footprint in the space, the management said Rencap also participated in N6.325 billion Green Bond issuance for North South Power, as well as a N34.965 billion Commercial Paper for Union Bank of Nigeria PLC.
It also registered a deal in a debut N20 billion Commercial Paper for Parthian Partners – Nigeria’s foremost interdealer broker. Lagos State is in the market with a 10-year transaction, where Renaissance Capital is acting as a joint issuing house, RenCap added.
“We are also acting as joint issuing house on MTN Nigeria’s equity issuance of 575 million shares. We continue to be part of the M&A landscape across financial services and anticipate further activity in this space as entities (domestic and international) seek value and scale in providing services to Nigeria’s burgeoning population”, the firm added.
RenCap Acting CEO said 2021 is a record year in terms of primary dollar issuance across Africa, particularly for Nigeria, with the sovereign, banks and corporates having already accessed the markets thus far.
“We expect to see more borrowings both in foreign and local currencies. The Nigeria sovereign will require funding for its budget deficit and this will be sourced internally and externally from commercial and multi-lateral entities”, Sule added.
He said investors will continue to monitor the performance of recently launched and historical Eurobonds issued to guide further appetite.
“The adoption of Basel III by the Central Bank of Nigeria, with new guidelines in place, has effectively created a new capital instrument in the form of Additional Tier 1 debt”. Read more>>> Firm Sees Official FX Rate at N482, Says Naira 13% Overvalued
Renaissance Capital successfully partnered with Access Bank on the first additional Tier 1 issue from Nigeria, and the firm said it expects this non-dilutive form of capital to be embraced by banks across both foreign and local currency markets.
“Inflation remains one of the drivers watched closely by markets and we continue to monitor how the regulatory landscape reacts to provide guidance to the issuer universe.
“This will have an impact on all forms of capital as investors focus on real returns. We believe 2022 will be opportunistic and issuers and investors alike will do well to be nimble and decisive”.
A very supportive and liquid market environment enabled Renaissance Capital to partner with key issuers to successfully launch market-defining transactions, RenCap Acting CEO remarked.
The firm said Eurobond markets will remain a key part of the funding mix for Nigeria sovereign, banks and investors will continue to monitor the performance of recently launched and historical issues to guide further appetite. #Renaissance Capital Sees More Eurobonds Raise for Nigeria, Banks
