UPDATE 1-Nigeria's Fidelity Bank eyes up to 50 bln naira debt sale before Q2

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By Chijioke Ohuocha
LAGOS, July 19 (Reuters) - Nigeria's Fidelity Bank
FIDELIT.LG aims to sell up to 50 billion naira ($163.2
million) in Tier II debt before the second quarter of next year
to refinance existing bonds as yields fall, the mid-tier lender
said on Friday.
Bond yields have been declining on the local debt market in
the face of recent central bank policies aimed at forcing
lenders to boost credit to businesses and consumers, which could
swell naira liquidity on the money market.
"We might issue naira bonds before Q2 2020 ... between 30
billion naira and 50 billion naira," the bank's head of investor
relations, Samuel Obioha, said.
"Currently, we have a seven-year local bond issued in 2015
... callable after five years. We might issue a new Tier II bond
before May 2020 to replace the existing bond and take advantage
of its capital impact."
Debt market yields have dropped from a high of 18% since the
government redeemed some of its treasury bills in 2017, rather
than rolling them over as before to lower borrowing cost. Yields
on the one-year treasury bill were quoted around 11% on Friday.
Nigeria's central bank has been tightening liquidity to curb
inflation and attract foreign investors into the bond market to
support the naira. But in a surprise change of stance, the bank
in March cut interest rates by 50 basis points for the first
time since November 2015. Analysts forecast another 50 basis point rate cut at the
central bank's next rate meeting on Tuesday.
Last week the central bank announced policies aimed at
boosting credit growth in Africa's biggest economy following a
recession. The bank hopes it can help revive an economy stuck
with low growth. However, pressure has started to build on the
currency, traders say.
Fidelity Bank said it had met central bank's new lending
requirements and that it expected yields to moderate as
competition for credit rose, which could hurt margins.
($1 = 306.45 naira)