NCB Financial Group Limited (NCBFG) is set to engage the capital markets in the coming two months with a significant goal: to raise $15 billion for refinancing existing debt. The initiative commenced on July 15 with the issuance of unsecured corporate bonds, distributed across three tranches with varying maturities spanning from two to five years. Semi-annual interest payments will be made on each tranche.Tranche A features a 11.50% interest rate for a two-year period, targeting a raise of up to $2.5 billion.
Tranche B offers a 12% coupon for a three-year term, with a goal to secure up to $7.5 billion.
Tranche C provides a 12.50% coupon for a five-year duration, aiming to generate up to $5 billion.
NCBFG holds the option to increase any tranche if the total $15 billion target is achieved. The minimum investment amount is set at $100,000, with trading increments of $10,000. Notably, these bonds will not be listed on any stock exchange. The offering will close on August 29, with bond issuance slated for September 9.
Refinancing this substantial debt load is anticipated to raise NCBFG’s interest expenses, given that some of the September maturities were previously priced at 6%. This move is part of NCBFG’s strategy to manage its holding company’s $36.84 billion debt maturing in the fiscal year ending September 30. An investor briefing is scheduled for August 9.
In May, NCBFG attempted to reduce its debt load through additional equity but fell short, raising only $2.48 billion of the $5.097 billion sought. Earlier in the year, NCBFG aimed to raise $9.5 billion and US$26.63 million (approximately $4.11 billion) through debt refinancing between February and May. According to Chief Financial Officer Malcolm Sadler, these efforts were deemed successful. The senior unsecured bonds offered in May had interest rates ranging from 11.25% to 12.50%.
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The current bond issuance reflects NCBFG’s effort to broaden its funding sources, now accessible to smaller investors with a minimum purchase of $100,000, compared to previous offerings which required larger investments.
Additionally, Guardian Holdings Limited, a subsidiary of NCBFG with a 61.77% ownership stake, faces a $1.99 billion debt maturity in September 2025 on its series B bond (6.50%), listed on the JSE Private Market. This is in addition to a TT$1.02 billion bond at 5%, maturing in December 2025.
NCBFG’s re-entry into the capital markets could influence other firms seeking to refinance or raise debt in a market characterized by tight liquidity. For instance, Mayberry Jamaican Equities Limited recently raised $3.38 billion with interest rates between 9.25% and 10.50% across three tranches, spanning 13 to 36 months.
The broader market’s response to these new debt offerings and the ongoing requests for debt extensions remains to be seen, especially as interest rates may evolve into 2025.t tackling them.
