Other commercial banks in Nigeria are hinted to be considering a similar move to increase their capital ratios lower than its minimum requirement.
The Union Bank of Nigeria is currently working with the Citigroup and Renaissance Capital on a Eurobond sale in 2018 to increase the bank’s lending capacity.
According to Reuters, the bank could issue up to $250 million in bonds including one in local currency.
In recent time, the Nigerian government had had many successful Eurobond issuances. The latest was a $2.5 billion Eurobond sale in February to refinance local currency bonds at a lower cost.
More so, the government plans to raise a further $2.8 billion this year.
Union Bank is currently undergoing restructuring, and this process has led to a $163 million share sale in the fourth quarter of 2017 to boost lending capacity. This is important as the bank is considering tapping into lending opportunities to agribusiness in Nigeria.
Other Nigerian banks are also gearing up to enter the Eurobond market to raise fund for the same purpose. This move is necessary as the Central Bank of Nigeria (CBN) has issued a directive to restrictive payment for banks with high non-performing loans and lower capital ratios.
First City Monument Banks, Diamond Bank and Fidelity Banks are listed as commercial banks from Nigeria that would be raising a corporate bond soon.