Stanbic Bank lead arranges largest corporate bond on GAX
The Head of Corporate and Investment banking at Stanbic bank, Mr Kwamina Asomaning, has asked companies seeking long-term debt financing to look to the bond market as an alternative to traditional bank financing.
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He said whereas bank loans typically contained more restrictive covenants, bond instruments afforded businesses greater flexibility in deploying the funds raised.
Speaking at the listing of a GH¢78.5 million medium-term note issuance for Bayport Financial Services under a planned GH¢200 million programme on the Ghana Alternative Market (GAX) he said, globally, financial institutions remained one of the largest issuers of notes and bonds. Stanbic was the lead arranger for the transaction.
“Regrettably, that has not been the case in Ghana. There have been a handful of banks that have issued commercial papers, which are short-term in nature,” he said.
According to him, financial institutions as well as other corporates were to issue medium-term notes to diversify their funding sources.
Flexibility of bonds
Lauding Bayport for being a pacesetter in that regard, he said, Stanbic intended to bring Bayport and other clients to a place where there would be an appreciation for the diversification and flexibility that bonds offered to businesses in their funding mix.
“With 29 banks in the country, you can imagine that businesses are spoilt for choice when it comes to bank financing,” Mr Asomaning said.
He added, “But indeed, one of the more difficult discussions we have with our clients who are close to exhausting their bank debt capacity is for them to look to alternative forms of financing, whether bonds or equity.”
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He projected that as interest rates declined, conditions for further bond would be more favourable. He, therefore, urged other companies to take a cue from Bayport and tap into the bond market in order to deepen their pools of capital and widen their investor base.
Bayport listing
Bayport Financial Services, on January 18, listed a debt instrument of GH¢78.5 million on the Ghana Alternative Market (GAX) of the Ghana Stock Exchange (GSE) to raise money to reduce its debt and increase working capital.
The funds, which will be raised in tranches, will sum up to GH¢200 million upon completion.
This maiden offer by Bayport Financial Services under the Note Programme constitutes a landmark transaction. Oversubscribed by 57 per cent, the transaction represents the single largest corporate bond listed on the Ghana Alternative Market to date, following three other listings.
The Ghana Alternative Market (GAX) is a similar market to the Ghana Stock Exchange First Official list but focuses on businesses with potential for growth and poses less stringent conditions for listing. — GB