United Bank for Africa, UBA will be selling a USD500 million senior unsecured debt notes.
For clarity, senior unsecured debt notes are debts that take priority over other unsecured or otherwise more “junior” debt owed by the issuer. Senior debt has greater seniority in the issuer’s capital structure than subordinated debt.
According to Thomson Reuters Eikon, UBA will list the instrument on the Irish Stock Exchange.
The bank intends to utilize net proceeds of the notes for its general banking purposes.
UBA sai din an official statement that The Central Bank of Nigeria (CBN) and the Securities and Exchange Commission have given “No Objection” approvals to the Transaction.
UBA intends to issue the Notes directly but will retain the flexibility to substitute the issuer with an offshore special purpose vehicle, where market conditions require and allow for such, prior maturity of the Notes. The Bank intends to utilize the net proceeds of the Notes for its general banking purposes. UBA will pay the net proceeds from the Notes issuance into its foreign currency domiciliary account, which may be retained by UBA in foreign currency or converted into Naira, depending on UBA’s requirement from time to time.
A certificate of capital importation (“CCI”) will not be obtained in respect of the proceeds of the Notes that are not converted into Naira because a CCI is only issued in respect of capital imported into Nigeria and converted into Naira. UBA intends to make principal repayment and interest payments on the Notes from its foreign currency reserves, since it will not be able to obtain access to the Nigerian foreign exchange market for the purpose of making such payments. Notwithstanding the foregoing, UBA will obtain the approval of the CBN to access the official foreign exchange market if for any reason the bank does not have sufficient foreign currency reserves to meet the principal and interest payments due on the Notes.
UBA is amongst most lenders in Nigeria affected by the crash in oil prices which led to a huge default on loans given to oil majors. The bank will be using the instrument to shore up its capital base to shoulder the impairments in its books.