Moody rates AMCON's Bond Refinance Plan 'Positive'
Moody's Investors Service, an international ratings agency has said plans by the Asset Management Corporation of Nigeria (AMCON) to retire about a third of its N5.7 trillion zero coupon bonds and refinance the rest by 2014 will boost the country's creditworthiness.
The move would eliminate government's indirect exposure to private creditors, Bloomberg quoted Moody's to have said Tuesday.
The corporation had issued a 3-year tenured zero coupon bonds with a principal amount of N3.9 trillion and a face value of N5.7 trillion, which had enabled it to fulfill its mandate of acquiring Eligible Bank Assets (EBA) and also in recapitalising the banking system. This had helped to restore the financial system.
Under the refinancing arrangement, the Central Bank of Nigeria (CBN) will invest in N3.6 trillion bond that AMCON will issue in December to refinance the bank's 'entire exposure' at an interest rate of about six per cent over a 10-year period, the CBN Governor, Mallam Sanusi Lamido Sanusi, had said.
That would make the central bank the sole creditor to AMCON by October 2014.
Moody's added: 'We view this as a credit-positive development for the government of Nigeria.'
Moody's rating for Nigeria is Ba3, three levels below investment grade.
AMCON had added: 'AMCON intends to repay all holders of Series 1 to Series 4 in December 2013, through the payment of cash and liquidity status qualifying instruments held by the corporation. The redemption and refinancing will be in a manner consistent with efficient and effective macroeconomic stability in general and ensuring no monetary policy dislocation.'