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Kogi restructures N8b bonds



Kogi State Government has restructured its sub-national bonds to extend the maturity date of the two bonds by three years.

The government restructured its Kogi State N5 billion Series I 15 per cent Fixed Rate Bond and N3 billion Series II 17 per cent Fixed Rate Bond under the state’s N20 billion debt issuance programme.

The N5 billion bond, which was expected to mature in December 2020, has been extended till December 2023 while the N3 billion bond, which was earlier scheduled with maturity in March 2022, will now mature in March 2025.

Market sources said the bonds were restructured as part of financial management strategy of the state government.

Nigerian governments and companies raised more than N2.2 trillion in new capital from the capital market in 2020 as governments and companies sought out financial buffers against global economic disruptions and adverse impact of COVID-19 pandemic.

Official data showed that governments and companies raised more than N2.2 trillion in 2020, the new capital were sourced through both debts and equities.

Regulatory report at the Nigerian Stock Exchange (NSE) indicated that the capital market provided critical funding in debts and equities to governments and companies, with sustained activities all through the lockdowns and disruptions occasioned by COVID-19 pandemic and global economic uncertainties.

A breakdown of the fund-raising entities showed five broad categories- Federal Government, state governments, quoted companies, fund management finds and special purpose vehicles (SPVs).

The issuers or fund-raising entities included sovereign issuances by the Federal Government of Nigeria, sub-national issuances by the Ondo State Government, debts and equities raising by several quoted companies including Dangote Cement, Flour Mills of Nigeria, Consolidated Hallmark Insurance, Coronation Insurance, formerly Wapic Insurance, International Breweries and Golden Guinea Breweries.

Other corporate issuers included Abbey Mortgage Bank, C & I Leasing, UACN Property Development Company (UPDC), United Capital, AIICO Insurance, Red Star Express and Interswitch Africa One. Investment management companies such as ARM Investment Managers and Meristem Wealth Management also launched new collective investment schemes.

The market particularly provided innovative finance through SPVs to support key infrastructural development and corporate restructuring. These included issuances such as Axxela Funding 1, LAPO MFB SPV, FBNQ MB Funding SPV and Primero BRT Securitisation SPV.

Preliminary data showed that the federal Government, which sustained a monthly savings bond issuance alongside mid to long-term general bond issuances, dominated the capital raising with nearly N1.9 trillion. Companies raised about N364 billion in debts and equities while other issuers raised about N56 billion.

There were also many landmark transactions during the period. Nigeria’s largest quoted company and Sub-Saharan Africa’s largest cement company, Dangote Cement during the year floated its maiden bond, a N100 billion bond, the largest single corporate bond issue in the Nigerian capital market. Dangote Cement indicated it would apply the net proceeds of the bond to refinance existing short-term debt previously applied towards cement expansion projects, working capital and general corporate purposes.

Also, International Breweries, the Nigerian subsidiary of Anheuser-Busch InBev (AB InBev), raised N164.39 billion through a rights issue, reported to be the largest right issue and a major indirect capital injection by a foreign investor in a Nigerian company.

Experts agreed that the Nigerian capital market has important roles to play in the development of the country, and have called on government to provide enabling environment for the capital market to lead national economic plan and development.

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