Yemisi Izuora
Rand Merchant Bank (RMB) Nigeria has secured approval from FMDQ OTC Securities Exchange to register its N80 billion Commercial Paper (CP) Programme on the FMDQ platform, a move that is expected to boost infrastructure financing in the country.
The programme, which is the first for RMB Nigeria in the local money markets, will form an integral part of the bank’s funding strategy, as it provides an avenue to successfully diversify its short-term funding sources thereby delivering value to its shareholders.
Besides, the debt move positions RMB Nigeria to easily and quickly raise short-term finance from the debt market, as well as at competitive costs. The formal signing of the deal was conducted in Lagos at the weekend, with officials of FMDQ, the lead arrangers – Standard Chartered Bank, Rand Merchant Bank Nigeria, and Stanbic IBTC Capital, and law firms – Aluko & Oyebode and Banwo & Ighodalo, in attendance.
The Managing Director of RMB Nigeria, Michael Larbie, affirms that the bank has business interests in the country’s infrastructure projects, particularly in the power sector, which the debt proceeds will help in financing further.
“As part of our funding to support our banking activities, we seek to employ a variety of options and the commercial paper is certainly one that allows us to do so. We are excited and it is going to be a part of our package that includes bond offering, which would soon be realized.
“We believe that commercial is efficient and quick to do, and it is a short term too, which is in alliance with what we are doing. We also appreciate the work FMDQ Securities is a ding in the market now to ensure transparency and raise good investor appetite and awareness.
“Our bond programme will still be a naira denominated one because we belong to a global group- First Rand and we are able to source dollars when we need them. So, there is no immediate need for the dollar and when the need presents itself for the dollar, we will consider it,” he said.
Larbie affirmed that the appetite for Nigerian market has returned on a high note, citing the examples of two banks that tapped the international market recently and were oversubscribed.
However, he explained that banks are now careful of who the lend to in dollar denomination, ensuring mostly that those companies must be dollar earning ones or have the ability to raise the currency no matter what happens.
He said that local manufacturing and productions of items are the best things that can happen to the country, in line with apex bank’s policy, adding that importation of virtually everything is not sustainable.
The Managing Director of FMDQ Securities, Bola Onadele, said the development of the commercial paper market that will allow corporates to raise debt, without going through the bank has been a long journey.