Business
Fidelity Bank secures N41.2bn loan, as unsecured bond is fully subscribed
Fidelity Bank is set to acquire a debt of N41.2 billion as its unsecured subordinated bond received 100% subscription.
The bond is exchanged for credit which is expected to mature by 2032.
The lender concluded the issuance of the offer for subscription of N41,213,000,000 at 8.5% fixed rate, according to a statement released to the Nigerian Stock Exchange (NSE).
Note that unsecured subordinated bonds is a loan source used by companies to raise funds or secure credit to finance their operation. It is a form of debt that is not considered a priority by the company when in a bankrupt state.
READ ALSO: Fidelity Bank slashes card spending limit as forex scarcity worsens
That’s why it is described as unsecured, as it is highly risky for the creditors offering the finance, when compared to other type of bonds. Companies usually pay off other debts before tending to unsecured subordinated bond.
Despite the risk, Fidelity Bank’s bond offer was subscribed 100%, with a total of 107 commitment forms for 56,593,000 units received in connection with the offer, but 78 commitment forms for 41,213,000 units within the clearing price of 8.5% were accepted.
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