Barclays seeks P2bn on bond market
Brian Benza | Friday September 5, 2014 13:27
The bond comes ahead of the bank’s release of the half-year financial results to June 2014. The results are expected to be more than ten percent lower than the corresponding period last year in which Barclays profit after tax fell 18 percent to P192 million.
According to Barclays, the bank will under the P2 billion Medium Term Note (MTN) programme not issue the whole amount at once but will from time to time issue a series of notes in tranches. The P2 billion note will replace Barclay’s current listed P100 million which is set to mature next month. According to Barclays, the final offer price, aggregate principal amount, interest, if any, of notes to be issued under the programme will be determined by the bank, and the arranger of the programme in accordance with prevailing market conditions. Finer details of the bond including issue date and tenure are yet to be provided. “The maximum aggregate nominal amount of all notes issued under this programme will not exceed P2 billion. The issuer may however, increase the amount of P2 billion with the consent of the Botswana Stock Exchange.
“The Bank of Botswana has indicated that it has no objection to the issue of notes under the programme. This programme has been approved by the BSE. Notes issued under this programme may be listed on the BSE or on any other recognised Stock Exchange,” said Barclays.
Commercial banks issue bonds from time to time to raise capital with most local banks holding a bond on the local bourse.
BBB capital adequacy ratio stood at 19.2 percent at the end of 2013 against the minimum regulatory threshold of 15 percent.
Other banks that currently have listed bonds on the BSE include Stanbic, Standard Chartered and NDB. FNBB the country’s largest bank also has an unlisted P1 billion bond.
With the implementation of Basel ll and partly Basel lll kicking in next year, most banks are expected to boost up their capital.
“The Botswana market is currently undergoing implementation testing for Basel II/III with a parallel run in 2014 and a go live date in 2015. “Whilst there may be room to optimise capital, we are reviewing our appropriate Tier1 and Tier II capital needs under the proposed framework,” Barclays said in their 2013 Annual report.
Implementation of the new regulations is meant to address poor liquidity risk management, inadequate quality and quantity of bank capital, excessive leverage in the banking system, corporate governance shortcomings and, disorderly de-leveraging by banks.