Foreign investors shun Diamond Bank's $550m bonds

By The Citizen

Diamond Bank's quest of raising fresh funds amounting to $550million from international market may have hit the rocks as foreign investors have shown no interest in buying into it.

The debt was part of $750 million needed for its operations, of which $200 million had already been raised last year

According to the bank, fresh fund would enable it to increase lending to the oil and gas, power and infrastructure sectors.

Already, France's BNP Paribas and Afrexim Bank have been contacted as lead managers to the bonds.

However, the bank's two-week investor road show to Britain, Switzerland and the United States last week, which was meant to update fund managers on the bank and gauge appetite for the issue ended in no deal, according to the Chief Finance Officer, Abdulrahman Yinusa.

He stated that due to the prevailing circumstance, the planned bonds issuance would take place in July, while pricing and tenor would be dependent on market conditions.

Sources close to the deal said that Diamond Bank had wanted to issue the bond at a yield of six to eight percent penultimate week, mirroring the seven percent yield that rival lender, Fidelity Bank, fetched on its $300 million Eurobond issue in May.

According to Yinusa, 'The issue as well as the pricing will happen some time in July. We have only done the road show,' adding that the bank had met Goldman Sachs and Fidelity fund managers, among other investors during the road show.

Depending on the pricing and tenor, Diamond Bank could settle for an amount between $300 million and $550 million, Yinusa said, noting that it will issue a minimum maturity of seven years in order for the bond to qualify as Tier II capital on its books.

In an investors' presentation prepared for the bond, it said the proposed 10-year bond will be callable after five years and will be listed on the Irish Stock Exchange.

It would be recalled that last month, Fidelity Bank, issued a $300 million 5-year Eurobond paying a seven per cent yield.

Also, FBN Holdings Plc, the parent company of First Bank Nigeria, announced a few weeks ago that it plans to raise $500million by selling a Eurobond this year. The Chief Executive Officer, FBN Holding, Mr. Bello Maccido, said that the money was needed to finance investments in loans and infrastructure.

He said, 'The bank intends to expand its investment banking and commercial business as well as insurance.'