AMCON Redeems N1trn Bond In 9 Days

Mustafa Chike-Obi, MD AMCON
Mustafa Chike-Obi, MD AMCON

The Asset Management Corporation of Nigeria (AMCON) will on December 30 redeem the N1 trillion series one, two, three and four bonds held by institutions outside the Central Bank of Nigeria (CBN).

CBN Governor, Mallam Sanusi Lamido Sanusi, confirmed Friday that the amount was already in the apex bank’s possession.

Sanusi who spoke in Abuja at the signing of an agreement between the CBN and AMCON to pave the way for the redemption of AMCON’s indebtedness, said an additional N1 trillion would be provided by the corporation by October next year to redeem the series five bonds.

CBN AMCON

According to him, the objective was to ensure that the CBN remained the only creditor to AMCON.

Sanusi signed on behalf of the CBN while the Managing Director of AMCON, Mr. Mustafa Chike-Obi signed on behalf of the corporation.

He said the deal represented the outcome of bilateral negotiations by both institutions and a major milestone in the resolution of the banking sector crisis which began in 2009.

The recent banking crisis led to the sack of the managing directors of eight Deposit Money Banks for gross mismanagement and also brought about the setting up of AMCON to help clean up the balance sheet of the banking sector.

Sanusi said that having issued bonds of about N5.7 trillion that enabled AMCON to put money into the balance sheet of banks to improve their liquidity, there was the need for the corporation to begin the redemption of these bonds under an arrangement that ensures that neither the Nigerian public nor government bore any burden.

“The N5.7 trillion includes interest component; the amount AMCON owes is N3.8 trillion. Some of the money will come from the sale of the underlying assets by AMCON. We are at a point where AMCON balance sheet has enabled them raise enough money to pay for this bond.

“Out of the N5.7 trillion worth of AMCON bond, on December 30th, AMCON is going to cancel by paying off N1trillion series one, two, three and four bond of all institutions that is held outside the central bank.

“In October next year, AMCON is going to write off another N1 trillion which is series five held by bank and other institutions,” Sanusi said.

When this is done, the governor said the only creditor to AMCON would be the CBN.

“No one will hold AMCON bond. So, this will now be AMCON owing the central bank and this is credit positive for this economy,” Chike-Obi said.

He however noted that the first step of the pact would enable the corporation reduce its obligation by 30 per cent.

“The implication of this agreement is that AMCON is on its first step of reducing its obligations from N5.7trillion to N3.8 trillion which is 30 per cent reduction and we will continue to reduce our indebtedness every year so that by the year 2023, AMCON is even and there is no burden on the federal government of Nigeria.

“We still have a lot of assets to sell and we have banks we have to dispose off. So, the work continues but I think this will convince Nigerians that this work is going somewhere.”

The AMCON boss noted that the corporation still had a lot of debt to recover, adding that it would continue to dispose off assets to enable it redeem its obligation.

He said that AMCON had received lots of interests from institutional investors for the acquisition of the three nationalised banks.

He added that the Enterprise Bank alone had 24 investors who had indicated interest to acquire the bank.

Tags from the story
AMCON, bonds, cbn, Enterprise Bank

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