Wema Bank Plans N20bn Bond Issue This Month

Wema Bank, which aims to expand its branch network this year, plans to issue N20 billion in bonds this month, its chief finance officer said on Monday, reports Reuters.
The bank is issuing local currency bonds after scrapping plans last year to issue a $100 million seven-year dollar bond because of currency risks.

“We expect to open in a couple of weeks. We are awaiting final regulatory approvals and we expect to conclude the process this quarter,” Tunde Mabawonku said.
Wema, which won regulatory approval last year to switch from a regional to a national bank, plans to re-open branches in Nigeria which it closed to become a regional player, he said.
Wema obtained shareholders’ approval in May to issue bonds or preference shares this year to raise N20 billion in the first tranche of a N50 billion programme, but market conditions then deteriorated.
The naira has dropped 40 percent since June, when the CBN ditched its 16-month-old peg of N197 to the dollar in a bid to lure back foreign investors who had fled after a plunge in the price of oil, Nigeria’s economic mainstay.

Mabawonku said the mid-tier lender was watching debt markets closely for rates, adding that it had a target break-even rate at which it wanted to issue the notes.
Nigeria’s one-year treasury bill is offering around 18 percent yield, traders say. Yields on fixed income securities have been rising in recent months with the central bank mopping up naira liquidity to lure back foreigners.
The central bank lifted interest rates by 200 basis points last week to 14 percent to help fight inflation, which hit a 10-year high of 16.5 percent in June.
“Yes the economy has slowed but there are still business opportunities,” Mabawonku said.
“We are opening locations in areas where we are not present and we see that the population is under-banked.”
Wema, which has more than 100 branches, has also said it aimed to buy a mid-sized commercial lender to build scale.
Last week Wema reported an 11 percent rise in half-year pretax profit to N1.30 billion.