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PTA Bank Successfully Issues a Second US$ 300 Million Eurobond

In November 2013, PTA Bank successfully issued and listed, on the Luxembourg Stock Exchange, a second300million USD, 5 year Eurobond. The transaction markedyet another milestone in the Bank’s resource mobilisation strategy of accessing international capital markets to raise significant volumes of medium and long term funding; and reaffirms the Bank’s eminent position as an African issuer of internationally traded bonds. The Bank issued its debut Eurobond of US$ 300 million in November, 2010 as part of a US$ 1.0 billion Euro Medium Term Note (EMTN)programme while in October, 2012, US$ 150 million was raised through a syndicated loan transaction.

Unlike the debut Eurobond whose proceeds went entirely to fund balance sheet growth, the 2013 issue combined both a balance sheet funding objective as well as a liability management exercise (LME). Essentially, the LME involvedan exchange processin which several investors of the 2010 bond were convinced to have their bonds redeemed early using proceeds of the new 2013 bond. The process culminated in US$ 200 million of the 2010 bonds being exchanged with the 2013 bonds thereby lengthening the maturity by almost two years to December, 2018, the maturity date of the new issue.TheLiability ManagementExchange transactionwas the first by a non-sovereign borrower in Africa aside from South Africa.

With a yield of 6.375%, the transaction was priced at the tight end of price guidance and at an exceptional zero basis points new issue premium based on the trading levels of the outstanding 2010 bonds pre-announcement.The new bond was also over 100 basis points inside the reoffer yield for the existing bond at the time of issuance in 2010 reflecting the Bank’s improved credit ratings of Ba1, BB+ and BB by Moodys, Global Credit Ratings and Fitch Ratingsrespectively.

The strength of the transaction and the attractiveness of theBank’s credit wereevident through the new issue order book which was 2.5 times oversubscribed. Following roads shows in London, Zurich, Geneva, Abu Dhabi, Dubai, Hong Kong and Singapore, the transaction was successful in delivering 17% distribution to Asia and the Middle East in particular, thereby achievingthe Bank’s investor diversification objective.Following the conclusion of the issue, the bonds have continued to perform exceptionally well in the secondary market generally trading above par in the range of 102% to 104% which strengthenedprospects for future issues including tapping the existing notes.

The 2013 Eurobond issue was the culmination of several months of meticulous planning which facilitated execution within a fairly short two month window. A cross functional Eurobond Task Force headed by the President and drawing representation from the key departments of Finance, Treasury, Legal, Risk, Strategic Business Initiatives and Corporate Affairs oversaw the successful execution. The maintasks included the appointment of transaction advisors, the updating of the EMTN programme documentation, legal documentation, due diligence reviews and investor road shows. The transaction advisorsincludedBNP Paribas and Standard Chartered Bank as Joint Lead Managers, HSBC and Standard Bank as Dealers, Clifford Chance, White & Case and Anjarwalla& Company as Legal Advisors and Ernst & Young (Nairobi) as Auditors.

 

The bond has the following key features.

Issuer

Eastern and Southern African Trade and Development Bank

Specified Currency or Currencies

U.S. Dollar (“ U.S.$”)

Aggregate Nominal Amount of Notes

U.S.$300,000,000

Liability Management Exercise

66% of the Aggregate Nominal Amount

Issue Price

100 per cent of the Aggregate Nominal Amount

Issue Date

November 2013

Interest Commencement Date

6 December 2013

Maturity Date

8December 2018

Interest Basis

6.3750 per cent, fixed rate, payable semi-annually in arrears

Interest Payment Date(s)

The interest ispaid by 6th June and 6th December in each year commencing 6th June 2014.

Redemption/Payment Basis

Redemption at par

Stock Exchange Listing  

The bond is listed on the Luxemburg 

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