Holders of Zambia’s Eurobonds are squaring up for what is likely to be a complex and lengthy debt-restructuring process. A group of lenders owning about a third of the nation’s dollar bonds, and in contact with another third, have formed a committee to negotiate with the government, Bloomberg News reported. Newstate Partners LLP will advise the creditors, who didn’t disclose who they were. Lazard Ltd. is representing Zambia. Zambia is looking to overhaul as much as $11 billion in foreign debt as part of efforts to unlock emergency funding from the International Monetary Fund.
FCMB Group Plc plans to restructure half of its loans after plunging oil prices, the coronavirus lockdown and a naira devaluation hindered the ability of the Nigerian bank’s clients to repay their debt, Bloomberg News reported. Credit facilities across industries ranging from oil and gas to small- and medium-sized enterprises will be reorganized, the Lagos-based lender said in a presentation on Tuesday. New terms will include a six-to 12-month moratorium on principal debt repayments and an extension on loan maturities of up to two years.
Nigeria’s central bank took 1.47 trillion naira ($3.8 billion) from lenders as additional cash reserves for failing to meet regulatory targets, according to people with knowledge of the matter, Bloomberg News reported. The accounts of almost 30 commercial lenders held with the central bank were debited by the regulator for missing thresholds on cash-reserve and loan-to-deposit ratios, the people said, asking not to be identified because the matter is confidential. The lenders are appealing the move, they said.
Nigerian banks still trying to recover from an economic contraction in 2016 now face a triple whammy of coronavirus, plunging oil prices and volatile markets that could further delay progress, Bloomberg News reported. The 2014 collapse in crude dried up foreign exchange in Africa’s biggest producer of the commodity, resulting in the first recession in 25 years and a currency devaluation. Businesses struggled to make repayments, heaping piles of toxic loans onto the books of lenders.
RT Briscoe (Nigeria) Plc is finalising arrangements to raise new capital to pay its burgeoning debts and improve working capital as the automobile company struggles to stave off insolvency, The Nation reported. In a regulatory filing at the Nigerian Stock Exchange (NSE), the board of the company stated that it was finalising arrangements for an open-ended actively managed fund to raise funds from the capital market. The net proceeds of the fund raising will be used to settle existing liabilities and increase working capital.
After months of forcing lenders to extend more credit, Nigeria’s central bank last week stunned markets with a measure that could result in the opposite response, Bloomberg News reported. Governor Godwin Emefiele increased the percentage of deposits that lenders need to park with the regulator -- and which doesn’t earn interest -- by 500 basis points to the highest level in more than four years. By upping the cash reserve requirement to 27.5%, the central bank is draining lenders of the funds they would typically use to create loans.
A consultancy firm that allegedly arranged a fraudulent $184 million loan announced by Nigerian oil company Lekoil Ltd said on Wednesday that it welcomed an investigation into the matter, Reuters reported. Shares in Lekoil Ltd fell by more than 70% following a suspension of trading after the firm discovered the loan was fraudulent. Lekoil had suspended trading of its shares on the London Stock Exchange on Monday after finding that the $184 million loan it had announced from the Qatar Investment Authority was a “complex facade” by individuals pretending to represent the QIA.
Shares in Lekoil crashed by more than 70 per cent on Tuesday as investors responded to news that the Nigeria-focused oil producer had paid $600,000 in fees for a $184m loan that did not exist, the Financial Times reported. The Aim-listed company, which Mark Simmonds, the UK’s Africa minister under David Cameron, recently joined as a non-executive director, will now have to find alternative financing from shareholders to fund the development of its key asset, the Ogo field in Nigeria.
Nigerian President Muhammadu Buhari is due to complete his second and final four-year term in 2023 and the battle over who will succeed him is already heating up, placing further pressure on an already strained economy, Bloomberg News reported. Buhari has thus far shied away from endorsing his deputy, Yemi Osinbajo, for the position, twice slighting him by opting not to transfer power to him while traveling abroad. That may diminish his chances of securing the top job.
Nigeria’s banking industry is opening the lending taps to avoid penalties, bowing to central bank demands to unlock credit to help revive the economy, Bloomberg News reported. Banks raised their loan-to-deposit ratio to 64% in the third quarter, one percentage point shy of the minimum target imposed by the central bank, according to Bloomberg calculations using quarterly banking data released by the National Statistics Bureau. The monetary authority gave banks until the end of the year to meet the threshold or hand over half of the shortfall to the central bank without earning interest.