Plans by Nigerian retail bank, Diamond Bank to launch a $550million bond has been put on hold until next month, despite just ending a two-week investor roadshow to Britain, Switzerland and the United States last week.
According to the Chief Financial Officer of the mid-tier lender, Abdulrahman Yinusa, the roadshow was to update fund managers on the issue and to gauge their interest in the bond which is expected to have a 10-year maturity period.
“The issue as well as the pricing will happen sometime in July. We have only done the roadshow,” Yinusa said.
Several emerging market borrowers, including Nigeria itself, have held roadshows in recent weeks, but the U.S. Federal Reserve’s talk of winding down its money-pumping programme has kept new issues to a minimum.
Yinusa said the bank had met Goldman Sachs and Fidelity fund managers, among other investors during the roadshow. The roadshow was arranged by lead managers for the bond, France’s BNP Paribas and Afrexim Bank.
A banking source said two weeks ago that Diamond Bank wanted to issue the bond at a yield of 6-8 percent, mirroring the 7 percent yield that rival lender Fidelity Bank fetched on its $300 million Eurobond issue in May.
Depending on the pricing and tenor, Diamond could settle for an amount between $300 million and $550 million, Yinusa said, noting that it will issue a minimum maturity of 7 years in order for the bond to qualify as Tier II capital on its books.
In an investors’ presentation prepared for the bond seen by this correspondent, the proposed 10-year bond will be callable after 5 years and will be listed on the Irish Stock Exchange.
Diamond Bank has a B credit rating and stable outlook from the ratings agency, Fitch, and says that it intends to use the proceeds from the bond issue to fund lendig to the oil and gas, power and infrastructure sectors in Africa’s second biggest economy.