Fidelity Bank has unveiled plans to issue $100 million in two year debt instruments in order to raise financing to shore up its foreign currency lending capacity.
The bank’s Head of Strategy, Francis Ikenga, says Citigroup has been appointed as the issuing house for the debt and would secure the loan through a book building process, after which the yield on the bond would be determined.
Ikenga says Fidelity Bank had opted for the transaction due to an increase in demand for foreign currency lending needed by its customers especially in the oil and gas, and telecommunications sectors.
Recently, Fitch Rating published Fidelity Bank Plc’s Long-term Issuer Default Rating (IDR) of ‘B’, Viability Rating (VR) of ‘b-’, Support Rating of ‘4’ and Support Rating Floor of ‘B’. The agency also assigned Fidelity a Short-term IDR of ‘B’ and affirmed its National Long-term Rating at ‘BBB+(nga)’ and Short-term Rating at ‘F2(nga)’. The Outlook on the bank’s Long-term IDR is Stable.
Fitch Rating said Fidelity’s IDRs, National and Support Ratings were driven by the limited probability of support that Fitch believed would be forthcoming from the Nigerian authorities given the bank’s perceived relative systemic importance.
While Fitch considered that the authorities’ willingness to support the bank would be high, this may be limited in light of Nigeria’s ‘BB-’ rating.
Fidelity’s VR reflects a challenging operating environment, weak earnings through Nigeria’s financial crisis and asset quality that was vulnerable to market conditions. The VR also took into account the acceptable Fitch core capital (FCC) and a cleaner balance sheet with healthy liquidity following the sale of problem loans to the Asset Management Corporation of Nigeria (AMCON).