Union Bank Issues N30bn 10-Year Bond at 16.2%

By Dipo Olowookere

Mid-level financial institution, Union Bank of Nigeria Plc, has sold bonds worth N30 billion to investors in a bid to raise funds to run its operations.

The lender, which confirmed this development during its analyst call, said the exercise recorded a 100 percent success rate.

The issuance of the debt instrument was part of the bank’s N100 billion debt programme and details showed that the Union Bank series 3 bond offering was with a 10-year maturity.

Business Post gathered that the N30 billion series 3 subordinated unsecured fixed rate notes were offered to subscribers at 16.2 percent and it was learned that the exercise was conducted and given at such high rate as a result of recent decline in yields of local bonds. It was reportedly offered to attract investors to purchase the debt instrument.

During its discussions with analysts recently after the release of its H1 2019 performance, Union Bank prided itself as a corporate institution in Nigeria to have issued largest 10-year bond ever as well as the one to auction to investors the largest corporate bond so far in 2019

It further said it was the “first bank to issue a Naira 10-year fixed rate bond (callable after 5 years) since 2014.

In the first half of this year, Union Bank improved the number of its active customers to 4.9 million from 4.3 million in the same period of 2018. This was buoyed by its intensified pursuit for quality customers and deepening relationship with existing customers.

During the period, the company diversified its loan book by increasing lending to retail by 8 percent from 6.9 percent in the 2018 financial year. The lender also increased its lending to the information and communication sector to 8.9 percent in H1 2018 from 3.2 percent in FY 2018, while lending to the oil and gas sector was reduced to 34.6 percent from 38.2 percent.

Though the gross earnings in H1 2019 reduced by 9 percent to N76 billion from N83.3 billion in H1 2018, the profit before tax went up by 4 percent to N12.1 billion from N11.7 billion, with the loan to deposit growing to 63.3 percent from 60.6 percent.