Ecobank Transnational Inc. (ETI) is calling on the general public to subscribe to its bonds.
On April 11 2019, it floated a $540m Eurobond Issue to refinance its existing debt obligations and provide additional funds to grow its continental operations.
The Eurobond Issue is for a coupon of 9.75%
The bank calls this move ‘execution’ phase of a five year strategic plan which commenced in 2016. A coupon of 9.75% is one of the highest for recent emerging market issues. The aim is to reposition the bank’s balance sheet and possibly increase its return on equity (ROE) in FY 2019.
The implication of this move is that ETI will be the first financial institution in Africa to raise a Eurobond at a holding company level, making it a major milestone for private debt Finance in Africa.
The debt would perhaps additionally help to the bank’s profit after tax expectations from $328.6m in 2018 to $358.7m for FY2019
The worries of some are that the coupon rate of the five year unsecured euobond note at 9.75% was steep. However, the bank expects that “as this is a debut Eurobond, this comes with a new-issuer premium and also a holding company structure premium, as ETI is a Holding company and not an operating banking entity”.
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.