UPDATE: FCMB Suspends N30b Capital Raiser Over Price Distortion

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UPDATE: FCMB Suspends N30b Capital Raiser Over Price Distortion
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First City Monument Bank Limited, the flagship company in the FCMB Group Plc, has suspended its planned capital raising  of about N30 billion in short-term debt capital through the issuance of commercial papers (CPs).

In a regulatory filing signed by its Company Secretary, Mrs Olufunmilayo Adedibu, FCMB yesterday said it suspended the CP issuance due to recent price distortion in the market.

“This is as a result of the Nigerian Treasury Bills auction of Wednesday, December 9, 2020, which distorted price,” FCMB stated.

FCMB had planned the N30 billion CP issuance under its N100 billion CP programme. The CP was arranged with a tenor of 260 days.

FCMB had indicated that the net proceeds from the suspended debt capital raising would have been used to support its short-term funding needs.

According to the group, the CP issuance would serve as an additional funding source for the bank.

Extracts from the third quarter results for the period ended September 30, 2020 showed appreciable growth across key performance indicators. Gross earnings rose to N146.43 billion in the third quarter 2020 as against N135.82 billion in third quarter 2019. Profit Before Tax rose from N12.80 billion to N15.85 billion. Profit After Tax rose from N10.79 billion in the third quarter 2019 to N13.90 billion in the third quarter 2020.

Many companies have turned to CP to raise short-term debt capital as the primary equities market struggles with investors’ apathy.

Union Bank of Nigeria (UBN) had recently floated a N20 billion short-term debt issuance aimed at strengthening the working capital of the commercial bank.

UBN raised N20 billion through the issuance of 180-day and 268-day commercial paper (CP). The new issuance was issued

The statement read in part: “With the sharp fall in oil prices as a result of COVID-19, the economy is projected to contract by over 4% in 2020, plunging the country into its deepest recession since the 1980s.

“Government revenues could fall by more than 15 billion dollars this year, and the crisis will push an additional 5million Nigerians into poverty in 2020.’’

The organisation added that the facility was prepared jointly with the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA).

Speaking about the partnership framework, Chaudhuri said: “This country partnership framework will guide our engagement for the next five years in supporting the government of Nigeria’s strategic priorities by taking a phased and adaptive approach.

“To realize its long-term potential, the country has to make tangible progress on key challenges and pursue some bold reforms.

“Our engagement will focus on supporting Nigeria’s efforts to reduce poverty and promote sustained private sector-led growth.”

On his part, the IFC Director for Southern Africa and Nigeria, Kevin Njiraini said: “The Country’s Partnership Framework leverages the World Bank Group to enable business growth that is inclusive and sustainable.’’

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