Nigeria’s Guaranty Trust Bank Plc, the parent company of Guaranty Trust Bank (Gambia) Ltd, on 22 January 2007 entered the international capital market and, without any guarantee by government or any international financial institution, raised $350 million in a Regulation S Eurobond offering.

The primary purpose of going to market is to enhance the foreign currency funding sources for trade and projects in its countries of operation, namely Nigeria, The Gambia, Sierra Leone and Ghana.

In what is regarded as a highly successful issue, GTBank had planned to raise only $300 million in Eurobond issue and eventually raised $521 million at the end of trading but only took and allotted $350 million, which means the original issue was over subscribed by $221 million or 74%, in a show of confidence on the bank, its subsidiaries, and the countries where the bank currently operates.

The Standard Bank of London was the Lead Manager of the D350 million five-year issue whose official signing ceremony was done in London, the UK, on 24 January 2007.

This is the first time since the early 1990s that any Nigeria institution would enter the financial markets and raise funds in a Regulation S Eurobond issue, according to GTBank plc.

Speaking to journalists last week, the Managing Director of GTBank plc, Mr Tayo Aderinokun, said: “We are very excited about this development. We are opening a new avenue of funding for Nigerian institutions and not only GTBank. Prior to this development, most Nigerian financial institutions have been relying and a lot still rely on funding from international financial institutions, most of which have stiff and limit conditions.”

Mr Aderinokun added further: “We are even more excited that we only came out to raise $300 million but we were oversubscribed and we raised $521 million. For us, this means we are doing something good and we hope to take GTBank, an institution of African origin, to a level where it would play big time in the international financial market.”

In his remarks to reporters, Aderinokun’s deputy, Mr Segun Agbaje, said, “For a debut bond, we believe that $350 million is okay so as to encourage secondary trading of the bonds for even higher yields.

“We are very excited about this. Don’t forget that we were able to achieve this feat without any backing; no guarantee from anybody at all.
We went out there and we told the international market the story of our bank and its operations in these four African countries, and we succeeded. This is record-breaking for us and we would not betray this confidence.”

For the highly elated Managing Director of GTBank Gambia, Mr Lekan Sanusi, “this achievement is very timely as the subsidiary in The Gambia now has unfettered access to a pool of dollar funding for trade, infrastructures and project financing in The Gambia. In the course of preparing for the issue, GTB Plc had asked us to scan the environment and submit prospective projects and funding avenues in The Gambia. We submitted projects which some of our customers have in the pipeline. We are delighted to confirm that the funds are now here.”

Noting the fact that actions speak louder than words, Mr Sanusi said the new development is another acid test of GTB’s plan for the region.

He explained: “We are not talking of funds that are being expected in a month or two from an international financial institution, w are saying that the funds are already in our hands, our own money, raised from the market using our own name and operations. In GTBank, we do not make noise over what we do not have or something coming; we celebrate and make noise over what we have achieved. This is our corporate philosophy.

“In fact, until recently, the prospect of a Nigerian institution attempting to issue bonds would have provoked mirth from some international financiers, but interest is now high, following Nigeria’s landmark deal with the Paris Club of government creditors in 2005 and a programme of radical reforms in the banking sector.”

GTBank was recently assigned a double B minus (BB-) long term credit rating by Standard & Poor’s (S&P) Ratings Services - the renowned global rating agency - which projected a stable outlook for the bank’s performance and corporate activities in the national operating environment in the short to medium term. The BB- rating is the same as the country rating of Nigeria.

According to the report prepared by S&P, this new rating, which is the first assigned by the agency to a Nigerian bank, “reflects Guaranty Trust Bank plc’s ability in sustaining a solid and thriving wholesale franchise, good asset quality, strong capitalization and experienced management team in spite of the challenges of a developing economy like Nigeria’s”.

The S&P analysts had also said “Guaranty Trust Bank plc is one of Nigeria’s most profitable banks, benefiting from wide interest margins and good efficiency; the bank’s return on assets (ROA) stood at 3.5 per cent in fiscal year 2006. The bank also has strong capitalization, with adjusted common equity representing 10.6 per cent of total assets and 38.4 per cent of total net loans at 28 February 2006.”

GTB Plc is a 16-year old Nigerian bank which has a chain of Small and Medium Enterprise (SME) companies and offshore subsidiaries in four West African countries. The subsidiary in The Gambia will be 5 years old in March 2007 and is already reputed to be the fastest growing bank in The Gambia with 5 branches it its 5 years of operation