₦airaland Forum

$500 million wort of bonds oversubscribed by 240%?! They underestimated their brand, considering the no of branches operational across the world. I was expecting at least a billion worth of bonds.

Before coming to cause kata kata with your oloribu self, kindly produce the source of this statistic. don't just mislead people into baseless hate comments. the source would also provide a lot of context

obaival:
HERE'S ONE NIGERIA YOU AGITATING FOR.

2017 BUDGET ALLOCATIONS FOR CAPITAL PROJECTS.

North Central - N209 billion
North West - N73.7 billion
South West - N48.97 billion
North East - N46.69 billion
South South - N35.31 billion
South East - N28.22 billion

How is Nigeria one nation? You will get 90℅ of the fund from the Oil rich Niger-Delta yet give them the least allocation for capital projects! This is an abnormal society.

Now, you know why they shout One Nigeria.

Copied.

Lagos is where all the finanncial institutions have their headquarters. It only makes business sense for the headquarters of these companies to be close to the financial center. plus there's less kidnapping going on compared to the niger delta. There's nothing weird about that.

Ezechinwa:
What he said is the truth,
all oil companies head quaters are in Lagos state, is that not weird

paranorman:
$500 million wort of bonds oversubscribed by 240%?! They underestimated their brand, considering the no of branches operational across the world. I was expecting at least a billion worth of bonds.

And do what with it? Do you just raise loan or equity capital just because the market will take it up?

It was oversubscribed because of the 8% yield.

With that borrowing coupon rate, that means that the capital cannot be deployed in Europe or US because it is higher than the average lending rate, so that leaves Nigeria as their major market to deploy it to.

In that case, there is high exchange and borrowers default risk should Naira nosedive again

icemann:
Yield of 7.875%. what? There is no where in EU or US you can get a yield of 3% from any financial institution . They want us to work and they will collect interest for doing nothing. Modern day slavery

Funny thing is that the bond is rated same as Nigerian Sovereign so that is the price for Naija. Common Ivory Coast got quoted 6.5% for over $1 billion.

Thieves!

Come to think of it, were UBA that desperate? They should fire all their advisors.

dotun365:
Lagos is where all the finanncial institutions have their headquarters. It only makes business sense for the headquarters of these companies to be close to the financial center. plus there's less kidnapping going on compared to the niger delta. There's nothing weird about that.

.
You haven't been to Niger delta before I guess,
go there and see how they are living in poverty, shell and other oil companies promised them hospitals, schools and other basic amenities if they allowed them to tap from their crude oil,
sadly, they never kept their promises, the militants are only fighting for their rights and pockets which is a good and bad thing.

if they kept their promises from the start, we wouldn't be in this mess.
watch Youtube (Aljazera documentary on militacy on Niger delta) you will understand better.


the only reason yorubas and Hausa s do not want Nigeria to divide is because of what they benifit from the south south,not because we love each other.


this dependacy has also killed Nigeria's progress, as it has made 180million peopke lazy and focused only on the oil sector, not caring for other sectors.


If Nigeria divides today, Lagos will easily survive cause of its innovative sense, other states will collape

icemann:
Yield of 7.875%. what? There is no where in EU or US you can get a yield of 3% from any financial institution . They want us to work and they will collect interest for doing nothing. Modern day slavery

You are right. Eurobond yields are very low at the moment even risk free bonds gives negative yield and yield of 2% corporate bond are oversubscribed so I'm not surprised about this. The yield is high because it is a junk bond with a high rate of default so investors has to be compensated. Also the credit rating was rated B because the bond cannot be higher than Nigerian sovereignty bonds which was issued late last year and the yield of the Nigerian sovereignty bond is also about 7%.

My concern - why is UBA borrowing $500million to pay back in 5 years with coupon (annual interest) at 7%. Does it intend to reduce its financial gearing by buying back equity shares, does it want to expand in other countries or overhaul its banking system. 5 years is a short time and I wonder how they would raise funds to pay back the principal. Anyways we shall see the event of things with time.

Kudos to them - not easy raising finance from Euromarket in view of the issue cost. I see other Banks following suit soon.

2n2k:
And do what with it? Do you just raise loan or equity capital just because the market will take it up?

It was oversubscribed because of the 8% yield.

With that borrowing coupon rate, that means that the capital cannot be deployed in Europe or US because it is higher than the average lending rate, so that leaves Nigeria as their major market to deploy it to.

In that case, there is high exchange and borrowers default risk should Naira nosedive again

Or maybe other African countries. I even forgot that they can lend this money out at 27-30 percent Nigerian Banks lending rate. Wow the spread is huge. The problem will be raising Fx to pay the interest and of course principal when due. I hope they have hedge the risk though. Converting to naira that's N152billion.

jabolo:
Funny thing is that the bond is rated same as Nigerian Sovereign so that is the price for Naija. Common Ivory Coast got quoted 6.5% for over $1 billion.

Thieves!

Come to think of it, were UBA that desperate? They should fire all their advisors.

A corporate institution bond cannot be rated higher than its country even if the institution shows strong financials and management expertise. Even if Lagos state goes to Euromarket to borrow, the highest rating it will get it a B, the same as Nigerian sovereignty bond

Boss13:
You are right. Eurobond yields are very low at the moment even risk free bonds gives negative yield and yield of 2% corporate bond are oversubscribed so I'm not surprised about this. The yield is high because it is a junk bond with a high rate of default so investors has to be compensated. Also the credit rating was rated B because the bond cannot be higher than Nigerian sovereignty bonds which was issued late last year and the yield of the Nigerian sovereignty bond is also about 7%.

My concern - why is UBA borrowing $500million to pay back in 5 years with coupon (annual interest) at 7%. Does it intend to reduce its financial gearing by buying back equity shares, does it want to expand in other countries or overhaul its banking system. 5 years is a short time and I wonder how they would raise funds to pay back the principal. Anyways we shall see the event of things with time.

Kudos to them - not easy raising finance from Euromarket in view of the issue cost. I see other Banks following suit soon.

I get the high risk high interest talk but the fundamental problem is that the bond is guaranteed by the govt(most times) so if they don't pay they will come for our Govt.
So here lies the question, is it UBA or FG using UBA to get loans? Like U said "why is UBA borrowing $500million to pay back in 5 years" . Remembered FG is looking for $1 Billion and they might have found half.

icemann:
I get the high risk high interest talk but the fundamental problem is that the bond is guaranteed by the govt(most times) so if they don't pay they will come for our Govt.
So here lies the question, is it UBA or FG using UBA to get loans? Like U said "why is UBA borrowing $500million to pay back in 5 years" . Remembered FG is looking for $1 Billion and they might have found half.

It is an unsecured debt. Only entities with credit ratings can borrow from Euromarkets. These are entities that consider their reputation very highly.

Oversubscribed for the juicy rate

Its a shame people who commented on the thread don't have adequate understanding on what Bond is...

Do u think its child's play for them to get 240% over subscribtion on their debut?

Qudos to UBA, its a great feat...

Ezechinwa:
What he said is the truth,
all oil companies head quaters are in Lagos state, is that not weird

Then stop kidnapping the owners and stop being lazy.
Make your domain habitable.

Ezechinwa:
.
You haven't been to Niger delta before I guess,
go there and see how they are living in poverty, shell and other oil companies promised them hospitals, schools and other basic amenities if they allowed them to tap from their crude oil,
sadly, they never kept their promises, the militants are only fighting for their rights and pockets which is a good and bad thing.

if they kept their promises from the start, we wouldn't be in this mess.
watch Youtube (Aljazera documentary on militacy on Niger delta) you will understand better.


the only reason yorubas and Hausa s do not want Nigeria to divide is because of what they benifit from the south south,not because we love each other.


this dependacy has also killed Nigeria's progress, as it has made 180million peopke lazy and focused only on the oil sector, not caring for other sectors.


If Nigeria divides today, Lagos will easily survive cause of its innovative sense, other states will collape

Have you considered that with the SS indigenes in charge of government bodiea like NDDC, OMPADEC, Ministry of Niger Delta and 13% derivation? Why are they still impoverished? What makes you think there will be any changes if they are a separate country??

Nellybii:
Have you considered that with the SS indigenes in charge of government bodiea like NDDC, OMPADEC, Ministry of Niger Delta and 13% derivation? Why are they still impoverished? What makes you think there will be any changes if they are a separate country??

I rather place my bet on that, than have 180million people depending on only one source of income,
we have other sectors
ICT
Agriculture
etc ..we were doing just fine before Oil came along,
this oil has poisoned Nigeria, as every state no longer want to find means to generate income,
excluding Lagos and few states.


Yeah, I also agree with you that SS still have corrupt leaders who will embezzle theIr natural resources.
But since we are one Nigeria, what have the government and others benefiting from Niger delta done to fix it?

Fisher men can no longer fish cause of Oil spillage,
Children lack access to water, electricity, and co due to failed promises.



I don't lack these things, but as a Nigerian, I always try to put myself in people shoes.

tribalism is eating us up,

In American it doesn't matter if your from Texas, or California, they see themselves as Americans, and the wound of one affects all.


but in my country Nigeria, it matters if your Yoruba your tagged Afonjas

Igbo Igbos,

etc...

with such environment, how do you ever think we can work together? its impossible, we only deceive ourselves about One Nigeria, as I said earlier because of what they gain from S'S oil.

the earlier we divide the better, cause its written all over

Boss13:
A corporate institution bond cannot be rated higher than its country even if the institution shows strong financials and management expertise. Even if Lagos state goes to Euromarket to borrow, the highest rating it will get it a B, the same as Nigerian sovereignty bond

We're saying the same thing. UBA got rated same as Naija but still got worse coupon quotes than CIV.

icemann:
Yield of 7.875%. what? There is no where in EU or US you can get a yield of 3% from any financial institution . They want us to work and they will collect interest for doing nothing. Modern day slavery

You can get that yield on some municipal and corporate bonds...especially those with average ratings. Most are callable though to prevent locking down the yield for years

Boss13:
It is an unsecured debt. Only entities with credit ratings can borrow from Euromarkets. These are entities that consider their reputation very highly.

I agree. The only guarantee is the credit rating of Uba, which is based on several factors. It's much like getting a credit card.

Okay

Ezechinwa:
I rather place my bet on that, than have 180million people depending on only one source of income,
we have other sectors
ICT
Agriculture
etc ..we were doing just fine before Oil came along,
this oil has poisoned Nigeria, as every state no longer want to find means to generate income,
excluding Lagos and few states.


Yeah, I also agree with you that SS still have corrupt leaders who will embezzle theIr natural resources.
But since we are one Nigeria, what have the government and others benefiting from Niger delta done to fix it?

Fisher men can no longer fish cause of Oil spillage,
Children lack access to water, electricity, and co due to failed promises.



I don't lack these things, but as a Nigerian, I always try to put myself in people shoes.

tribalism is eating us up,

In American it doesn't matter if your from Texas, or California, they see themselves as Americans, and the wound of one affects all.


but in my country Nigeria, it matters if your Yoruba your tagged Afonjas

Igbo Igbos,

etc...

with such environment, how do you ever think we can work together? its impossible, we only deceive ourselves about One Nigeria, as I said earlier because of what they gain from S'S oil.

the earlier we divide the better, cause its written all over

If you agree with the bolded, better don't place your bet on that. These agitations are still borne out of the greed and the self centered nature of the African that is embedded in our genes sadly. Look at Equatorial Guinea with a population of less than Bayelsa state's. They have the crude oil also but do you know that the standard of living is terrible.? That is what dubious leadership does. Nothing will get better if we divide anything and we are still the same people. We have to change our attitudes first. Let us shun corruption, let us kill kleptomania and other good things will follow naturally.