In its renewed efforts at developing the Small and Medium Enterprises (SMEs) segment of its business, Wema Bank Plc yesterday presented before investors N20 billion bond for subscription.
The bank, which recently got approval for national banking licence, desires to play prominent role in SME space and through that hopes to bring development to the economy as well as create employment.
The bond is a fixed rate unsubordinated unsecured bonds to be issued under a N50 billion debt issuance programme. Rated BBB- by GCR and Fitch, the bond with seven-year tenor, offers for subscription by way of a book build eligible for investment by Pension Fund Administrators (PFAs) at a competitive premium above the FGN 2022 bond.
Ademola Adebise, executive director of Wema Bank, noted that despite the challenging economic environment, the bank recorded Non-Performing Loan (NPL) of 2.83 percent in first half of 2016, which is below regulatory limit of 5 percent and industry average of 10 percent.
Liquidity ratio of the bank is above the regulatory limit of 30 percent in the same period and coverage ratio stood at 10 percent, ensuring adequate provisioning for known impairments and losses.
Making a presentation on financial highlights of the bank, Tunde Mabawonku, chief finance and strategy officer, said at half-year 2016 the bank recorded capital adequacy ratio above regulatory limit of 10 percent, despite the introduction of regulatory changes.
“We remain confident that despite the current macroeconomic environment, the bank remains well positioned to weather negative shocks,” Adebise, said.
Mabawonku added that the bank would continue to focus and grow the retail and commercial segment of its business.
Presenting the bond before investors in Lagos, Egie Akpata, director, Union Capital Markets, explained that the bond which offers minimum of N20,000,000 (that is 20,000 units @N1,000/unit) and multiples of N5,000,000 thereafter will be listed on the floor of FMDQ. It will be issued at N1,000 and redeemed in full at par on 2023.
He said Wema Funding SPV plc issues bonds to the investing public in consideration for cash. It invests 55 percent of the proceeds in Wema bank tier II subordinated bonds and 45 percent in FGN Bonds.
One of the advantages of the deal structure for investors is significant collateral of 45 percent which gives investors confidence that they are well protected from downside risk.
