Wema Bank Plans N20bn Bond Issuance

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Wema Bank Plc, which plans to expand its branch network this year, is to issue N20billion ($63 million) in bonds this month, its chief finance officer said on Monday.

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 told Reuters monrday.

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 per cent since June, when Nigeria 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 per cent yield, traders said. 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 per cent to help fight inflation, which hit a 10-year high of 16.5 per cent 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.