Nigeria’s biggest and oldest leasing firm’s bond has been oversubscribed

The N7 billion bond issuance of Nigeria’s biggest and oldest leasing firm, C&I Leasing Plc has been oversubscribed by 33 percent. This was made known by Chukwuma Okolo, Chairman C&I Leasing Plc at a signing ceremony with issuing houses, trustees and other partners, which held in Lagos on Monday. The bond offer is a five-year fixed rate senior secured bond, which was officially opened for issue on May 21 and closed on June 4, 2018.

“We had an extremely successful outing… we had 133 percent subscription to our required N7 billion. But of course, as a disciplined company, we are accepting what we set out to raise,” Chukwuma Okolo said.

The company plans to use a significant part of the money raised from this series to finance maturing bank loans and scale up its services in the oil and gas sector. It plans to use the funds raised to buy more vessels to lease to oil companies and expand its business in Ghana as Dubai-based private equity firm Abraaj exits. With this, the company’s debt ratio would be cut to 70 percent from 80 percent and it would be able to redeem a $2.4 million loan it got from Aureous Capital, now part of Abraaj group.

What you didn’t know about C&I Leasing

C&I Leasing supplies patrol boats and tugboats to Shell, Mobil, Chevron and NNPC’s operating unit, via long-term contracts. It has 23 vessels and competes with French rival Bourbon Offshore.

The company is listed on the Lagos stock exchange and its core investors are also directors, owning 56 percent of the shares while the rest is free-float.

The company had a vehicle distribution unit which was shut down at the start of Nigeria’s worst recession. The company now decided to focus on oilfield service marine vessel rentals, fleet management and personnel outsourcing.

These days there seems to be a rush for corporate bonds as there has been an improved liquidity on the Nigerian Stock market and FMDQ OTC Securities Exchange which is encouraging firms to sell more debt securities due to the lower interest rates and improved economic indices. With the way things are going Nigeria’s securities regulator should start preparing for record bond issuance. Analysts expect the central bank to cut interest rates this year as inflation slows.