Notwithstanding the backdrop of postponed elections and higher bond yields following last week's 100bp rise in the Monetary Policy Rate, Nigeria's Asset Management Corporation of Nigeria (AMCON) closed its book building and priced 3-year zero-coupon bonds maturing December 31, 2013 inside market expectations, at an 11.8% yield. 

The Series I bonds of the first Debt Issuance Programme by Nigeria's 'bad bank' and largest asset manager were issued at a Completion Ceremony in Abuja on April 6, 2011. This landmark transaction with face value of N1.65tn (c.US$11.0bn) marked the first time that zero-coupon bonds have been issued in the Nigerian market.

Series I Tranche I for N1.11tn (c.US$7.4bn) will be used to swap the Initial Consideration Bonds which were issued on December 31, 2010 to acquire non-performing loans (NPLs) from 21 Nigerian Banks.

The oversubscribed Series I Tranche II for N20.69bn (c.US$138mn) was issued by way of a book build which opened on Friday April 1, 2011 with Nigeria's leading investment bank, Chapel Hill Advisory Partners Limited, acting as Lead Book Runner.

AMCON also acquired additional NPLs from 22 banks and issued Series I, Tranche III for N520.07bn (US$3.5bn), to fund these purchases.

We applaud the AMCON team led by Mustafa Chike-Obi along with the National Assembly and all the regulators including CBN Governor Sanusi, Minister of Finance Aganga, Director-General of the SEC Oteh, Director-General of the DMO Nwankwo, the Pension Commission and the Federal Inland Revenue Services together with the advisers to the transaction, who have all worked hard to achieve this outstanding result.

Furthermore, Nigeria's banks have also played a critical role in this process by contributing annually into a sinking fund for the next 10 years, which will minimise the net resolution cost of this banking intervention to taxpayers. It is expected this initiative will bring sector NPLs to their lowest levels in over a decade and is a major milestone in Sanusi's banking reform programme.