Fidelity Bank Issues $400m Eurobond, Refinances $256m of Maturing Notes

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Goddy Egene

Top Nigerian lender, Fidelity Bank Plc, on October 11, 2017, returned to the international capital markets and priced a successful $400 million five-year Eurobond at a 10.50 per cent coupon. The transaction also included the $256 million repurchase of its existing $300 million Eurobond maturing in May 2018.

The transaction, according to the bank, was part of a strategic liability management exercise designed to extend Fidelity Bank’s debt maturity profile and proactively refinance the maturing 2018 Eurobond.

The transaction, regarded as the largest combined new issue and liability management offering ever by a Nigerian issuer, was managed by Citigroup Incorporated, Renaissance Capital and Standard Bank Group Limited, said a statement from Fidelity Bank Monday.

The bank conducted a comprehensive five-day roadshow, with its senior management team covering London, Boston and New York as well as numerous calls with West Coast accounts and other global investors, resulting in an over 200 per cent oversubscription, with investors placing orders of $630 million.

The strong investor demand, said the statement, allowed the bank to increase the offer size to $400 million whilst achieving a lower coupon rate of 10.50 per cent.
The deal achieved a wide market distribution with over 100 investors from the U.K., U.S., Continental Europe, Asia and Africa subscribing to the new issue.

The proceeds from the new Eurobond of US$400 million was used to finance the existing bondholders who subscribed to the tender offer to the tune of $256 million, while the balance (net issuance cost) will be used to support the trade finance business of Fidelity Bank
Mr. Nnamdi Okonkwo, Managing Director, Fidelity Bank, said: “We are delighted to have successfully completed the offering, and believe the transaction has a big positive signaling effect.

“It paves the way for other banking institutions, especially the Tier 2 Banks in Nigeria to explore the Eurobond source of funding in the international arena and talk to the global emerging markets investor community as Nigerian market rebounds and we see bigger demand for strong local stories.”

Fidelity Bank’s $400 million issue demonstrated strong trading upon entering the market post pricing, cementing the Eurobond’s robust position.
Fidelity is a full-fledged commercial bank operating in Nigeria with over 3.8 million customers who are serviced across its 240 branch offices and various digital banking channels.

The bank is focused on select niche corporate banking sectors, Small and Medium Enterprises (SMEs), and is rapidly implementing a digital-based retail banking strategy which has resulted in the following over the last three and a half years: a 93 per cent growth in savings deposits, 50 per cent customer enrollment on debit cards; and 30 per cent of its customers now using its flagship mobile/internet banking products.

Fidelity Bank recently released its audited half-year results which showed a remarkable improvement on all indices with gross earnings increasing by 22 per cent to N86 billion, expenses declining by 2 per cent to N31 billion and profit before tax (PBT) increasing by 67 per cent to N10 billion.
Fidelity Bank was also recently rated the Fourth Best Bank in the Retail Segment in the 2017 KPMG BICSS, the Best Bank in Mobile Banking and the Most Improved Bank in Corporate/Investment Banking at the 2017 Businessday Banking Awards.