The Development Bank of Nigeria (DBN) is seeking to raise N23 billion 14.40 percent bond due in 2028.
This is coming after the initial N20 billion debut issuance under DBN’s N100 billion medium term note programme was oversubscribed.
This was targeted at expanding the capital base of the development finance institution promoted by the Federal Government. With DLM Advisory as the lead issuing house, followed by Standard Chartered Bank, bond issuance has other partners namely: G.Elias, Meristem, First City Monument Bank, Access Bank, Delloitte, Zenith Bank, Agusto &Co., GCR Ratings an affiliate of Moody’s Investors Service, Olaniwu Ajayi and ARM Trustees.
Speaking at the signing ceremony in Lagos on Thursday, the Managing Director of the ban, Dr Tony Okpanachi, said the choice of partners and issuing houses was premised on their track records. He said, “obviously we looked at the track records and we also hoped to work with more partners.
We are quite comfortable that they know the market and they have worked well with us, having raised bonds for several organisations. As we raise more funds, we would work with more partners so the door is not closed to others.”
Offer documents indicated that the net proceeds of the N23 billion issue would be used to expand DBN’s capacity to provide funding to Micro, Small & Medium Enterprises (MSMEs), in furtherance of its core corporate objective.
Development Bank of Nigeria exists to alleviate financing constraints faced by MSMEs in Nigeria through providing financing, partial credit guarantees and technical assistance to eligible financial intermediaries on a market-conforming and fully financially sustainable basis.
Earlier, shareholders had approved a N100,000,000,000 Medium-Term Notes Programme, authorising the bank to issue from time to time, debt securities (“Bonds’), the aggregate nominal amount of which shall not exceed N100,000,000,000.00 (One Hundred Billion Naira).
Okpanachi, stated that DBN was set up to provide wholesale funding MSMEs and the bank has been doing that in the last six years. According to him, the initial funding that was raised for DBN had come from development partners.
“So we’ve mobilised capital from outside the shore of Nigeria. That was the first step. As an institution going forward, we will also be able to catalyse some fundraising within the economy itself to lend to the micro, small, and medium enterprises.
“We are expanding our funding base beyond the development partners we received funding from. Now we are raising funds, locally. Because if you remember, the need of that segment in the economy is huge,” he emphasized.
He explained that the monies borrowed from the development partners, would be paid back, just as the funds given to MSMEs would also be paid back because they are all loans.
Also speaking, Mrs Ijeoma Ozulumba, Executive Director and Chief Financial Officer DBN said this is a way of building a structure or an institution where small businesses can actually be supported by way of having access to finance.
She added that the rates are affordable and that as the economy improves and interest rates moderate, it will also reflect on the instrument.
According to her, further issuances depends on the market conditions, the utilization of available funds and when shareholders and advisers give a go ahead for that.