Coronation Merchant Bank (‘the Bank’), formerly Associated Discount House Limited, has completed the issuance of a N16.79bn senior unsecured FMDQ-listed commercial paper for UACN Property Development Company Plc (“UPDC”).
The transaction, which was part of UPDC’s N24bn listed commercial papers programme, was oversubscribed by 67.9%, amounting to N6.79bn over the sum of N10bn initially targeted by the issuer, UPDC.
In executing this landmark transaction, Coronation Merchant Bank acted as Joint Lead Arranger, Dealer, Issuing, Calculating and Paying Agent to the transaction, having structured, marketed, distributed and facilitated the FMDQ listing of the commercial paper.
As a wholesale financial institution with the capacity to provide innovative financial solutions and to lend its robust distribution platform to its clients, this transaction has once again affirmed Coronation Merchant Bank’s status as the go-to institution for investment banking services.
To enhance the commercial paper offering, Coronation Merchant Bank jointly provided a liquidity backstop facility alongside the partial corporate guarantee from the UAC of Nigeria Plc (UPDC’s parent company). The Bank’s collaboration in the provision of backstop facility is the first of its kind in Nigeria and its ingenuity boosted the investment grade of the commercial paper to “A-“, despite its issuer’s “Bb-“ Agusto rating.
On 18th April 2016, the transaction was priced at a discounted rate of 10.34% and an effective yield of 11.00%. Being a 183-day tenor instrument, the commercial papers will mature on 18th October 2016. As a result of the attractiveness of the pricing at the date of issuance to both UPDC and investors at the date of issuance, which created a win-win situation for the parties in the, UPDC was able to lower its financing cost by c.500 bps. Consequently, this increased value for shareholders, while investors received superior returns on their investment, as the deal was priced 150 bps above treasury of similar tenor.
Driven by its aspiration of becoming Africa’s premier investment bank, Coronation Merchant Bank is already demonstrating industry leadership in sustainable and ethical business practices. The Bank is one of the latest entrants into the merchant banking space and offers investment banking, corporate banking, private banking / wealth management and global markets / treasury services to its diverse range of clients. It also provides securities trading / brokerage, asset management and trustees services via its subsidiaries: Coronation Securities Limited, Coronation Asset Management Limited and Coronation Nominees and Trustee Limited, respectively. The Bank has two branches in Abuja and Port Harcourt, and its head office is located in Lagos.
Coronation Merchant Bank predicates its operations on an enterprise risk management framework and a conservative yet highly responsive portfolio management philosophy. This strategy, which combines a guarded risk attitude with a strong risk bearing capacity, is quickly transforming the Bank into the leading provider for a variety of financial services.
About Coronation Merchant Bank
Coronation Merchant Bank is a full service merchant bank formed from erstwhile Associated Discount House Limited (ADHL). The Bank commenced its operations as a merchant bank in 2015 following CBN’s approval of the transferral from a discount house licence to a merchant bank licence. Subsequently, it was issued a FX dealing licence in 2015 by the CBN, enabling it to fulfil its operational requirements as a merchant bank. With these regulatory approvals, Coronation Merchant Bank assumed the heritage and liabilities of ADHL and brought a new force in the Nigerian banking industry to life.