Skye Bank has signed an agreement with Stanbic IBTC Bank and Financial Market Dealers Quotation System to issue N100bn in commercial paper to increase its ability to do more transactions.
The first tranche of the transaction is worth N20bn and opens on Monday and closes on Friday.
The Managing Director/Chief Executive Officer, Skye Bank, Mr. Timothy Oguntayo, said the bank was taking advantage of the commercial paper window to expand the number of instruments on its balance sheet.
According to him, the bank is driven “to take advantage of this programme to increase awareness of the availability of this innovative product in the market place and to help acquire investments that are tradable without suffering penalty.”
A statement by the bank on Tuesday stated that Skye Bank was the second lender to take advantage of the reintroduction of the commercial paper window since 2009 by the Central Bank of Nigeria and FMDQ, and that the current transaction represented only the third since then.
For a bank to qualify to issue commercial paper, it must be liquid, have a favourable credit rating of not less than B- and must have record assuring investors of its ability to perform, according to Nosakhare Aguebor, an associate at G. Elias and Co.
According to the statement, Skye Bank has investment grade ratings of A- from Global Credit Rating; BBB by Standard and Poor’s; and Bbb by Agusto & Co.
The Chief Executive Officer, StanbicIBTC Capital, Yewande Sadiku, described the deal as a milestone in the history of market innovation in the country and thanked Skye Bank for the opportunity to be involved in the deal.
“Skye Bank is making the issue on the back of its strong brand and reputation; experienced and stable management team; good ratings; strong subsidiaries and presence in West Africa; and sound use of proceeds,” a summary of issuance programme stated.
The issue, which has StanbicIBTC as agents and adviser, has a 90-day tenor benchmarked against the 91-day Treasury Bill. Minimum subscription to the offer is N5m in multiples of N1,000 and notes may be rediscounted at investors’ option and subject to one week notice.
Skye Bank had recently acquired Mainstreet Bank for N126bn in a deal promising to transform it into a tier one bank.
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