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Nigeria to raise $1bn Eurobond, seeks managers, adviser

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  • AfDB approves $9m equity investment for SME’s in Nigeria

The federal  government has set machinery in motion to raise $1 billion from International Capital Market in 2016, the Debt Management Office, DMO, has disclosed. The DMO in a statement on its website said it is seeking two lead managers and a financial adviser to organise the issuance of $1 billion Eurobonds this year.

The $1billion sale is the first tranche of a $4.5 billion Nigeria Global Medium-Term Notes Issuance Programme that runs through 2018, it said.

The DMO is seeking to appoint two international banks as joint lead managers and a local bank as financial adviser for the whole programme.

Bids are to be submitted by noon on September 19, in Abuja. The move the statement said is to “enable Nigeria to have the flexibility of quickly taking advantage of favorable market conditions in the international capital market to raise funds if and only when the need arises.”

The statement by DMO reads in part “The Federal Republic of Nigeria (FRN) is in the process of establishing a $4.50 billion Federal Government Medium Term Note (FGMTN) programme, 2016-2018, out of which it intends to issue $1.00 billion Eurobond in the year 2016. The purpose of establishing the FGMTN programme is to enable the FRN have the flexibility of quickly taking advantage of favourable market conditions in the International Capital Market (ICM) to raise funds, if and only when the need arises.

“In view of the foregoing, the Debt Management Office (DMO), on behalf of the Federal Government of Nigeria, wishes to appoint: two international banks as Joint Lead Managers; and, one local bank as Financial Adviser for the planned FGMTN programme and the issuance of $1.00 billion out of the $4.50 billion FGMTN programme in 2016. The parties will be appointed separately by the FRN, but will be required to work together to ensure a successful Transaction.

“The Joint Lead Managers and the Local Financial Adviser shall be expected to render the following services: Assist the DMO with the determination of the features of the FGMTN, 2016-2018 programme’s requirements for listing of the FGMTN, particularly in relation to subscription and settlement to ensure its acceptance by the target investors; work with legal counsels and the DMO to ensure the FG MTN programme complies with relevant legal and regulatory requirements in their respective jurisdictions; advise the DMO of the appropriate strategy for the FGMTN programme and the issuance processes and procedures for securities offerings under the programme; and work with legal counsel and the DMO in connection with the preparation of the Programme/Dealer Agreement and any other documents that are related to the offering of securities under the FGMTN.

Such advisers are to collaborate with the DMO and other transaction parties in the preparation of the Base Prospectus and other documents required to execute the FGMTN, as well as, any other documents to be submitted to relevant regulators in the United States of America, the United Kingdom and other jurisdictions as may be required. The Eurobond sales this year would be the first since Nigeria tapped the market in July 2013 and an inaugural issue in 2011.

President Muhammadu Buhari approved a record N6.1 trillion spending plan this year and the Treasury intends to borrow to plug the budget’s N2.2 trillion deficit. The federal government is increasing spending to stimulate the economy after it contracted by 0.4 percent in the first quarter as revenue dwindled amid lower oil prices and a decline in output. The economy could shrink 1.8 percent in 2016, according to the International Monetary Fund.

In the meantime, the African Development Bank (AfDB) has approved a $9million equity investment in the Fund for Agricultural Finance in Nigeria (FAFIN) to provide expansion capital to agric small and medium-sized enterprises (SMEs), according to a statement issued by continental lender yesterday.

The statement said FAFIN is a first-generation private equity fund that provides financial, capacity-building and technical assistance to commercially viable SMEs in the Nigerian agribusiness sector.

It said FAFIN used a unique value chain-centric approach, a combination of equity, quasi-equity and convertible loan instruments to provide loan for SME s.

According to it, FAFIN implements its strategy and constructs its portfolio through a bifocal lens consisting of the twin objectives of competitive financial returns and measurable positive social impact.

The Fund is jointly sponsored by the German KfW Development Bank and the Government of Nigeria, through the Federal Ministry of Agriculture and Rural Development (FMARD).

The Fund Manager is Sahel Capital (Mauritius) Limited, a fund management firm incorporated in Mauritius in 2013.

The project is expected to deliver strong development outcomes from household benefits and employment through the creation of a large number of jobs and the provision of agric products.

It also said this would bring about positive gender and social effects through the implementation of out-grower schemes and supporting rural development and private sector development.

It said through alleviation of financial constraints faced by agribusinesses, this would enhance agricultural value chains.

“The project’s contribution to inclusive growth is expected to be significant, given the large numbers of jobs to be created and out-growers to be reached at the level of sub-projects,’’ the statement explained.

Its contribution to green growth is expected to be low, because the Fund targets the agribusiness sector with some expected negative effects on the environment.

The Fund’s primary focus will be on SMEs across the agric value chain with crop value chain and geographic diversification.

It aims at fixing broken value chains to increase efficiencies, reduce post-harvest loss, and increase smallholder farmer incomes and SME agribusiness profitability.

Investment instruments will be primarily quasi-equity (convertible bonds, preference shares and structured royalties) and direct equity. The ticket size ranges from $500, 000 to $5 million.

The Fund is aligned with the Bank’s Ten Year Strategy focusing on inclusive growth, strengthening agriculture and food security, and access to local SME finance.

It added that this encapsulated in the Bank’ High Five Development Agenda for Africa, specifically Feed Africa and Industrialise Africa.

It is also in line with the Bank’s Strategy for Agricultural Transformation in Africa (2016-2025), Strategy on Jobs for Youth in Africa (2016-2025).

Others are the Bank’s Country Strategy Paper for Nigeria (2013-2017), which supports an enabling environment for agriculture.

Vanguard with additional report from Upshot

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WAIVER CESSATION: Igbokwe urges NIMASA to evolve stronger collaboration with Ships owners

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…Stresses the need for timely disbursement of N44.6billion CVFF***

Highly revered Nigerian Maritime Lawyer, and Senior Advocate of Nigeria (SAN), Mike Igbokwe has urged the Nigeria Maritime Administration and safety Agency (NIMASA) to partner with ship owners and relevant association in the industry to evolving a more vibrant merchant shipping and cabotage trade regime.

Igbokwe gave the counsel during his paper presentation at the just concluded two-day stakeholders’ meeting on Cabotage waiver restrictions, organized by NIMASA.

“NIMASA and shipowners should develop merchant shipping including cabotage trade. A good start is to partner with the relevant associations in this field, such as the Nigeria Indigenous Shipowners Association (NISA), Shipowners Association of Nigeria (SOAN), Oil Trade Group & Maritime Trade Group of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).

“A cursory look at their vision, mission and objectives, show that they are willing to improve the maritime sector, not just for their members but for stakeholders in the maritime economy and the country”.

Adding that it is of utmost importance for NIMASA to have a through briefing and regular consultation with ships owners, in other to have insight on the challenges facing the ship owners.

“It is of utmost importance for NIMASA to have a thorough briefing and regular consultations with shipowners, to receive insight on the challenges they face, and how the Agency can assist in solving them and encouraging them to invest and participate in the maritime sector, for its development. 

“NIMASA should see them as partners in progress because, if they do not invest in buying ships and registering them in Nigeria, there would be no Nigerian-owned ships in its Register and NIMASA would be unable to discharge its main objective.

The Maritime lawyer also urged NIMASA  to disburse the Cabotage Vessel Financing Fund (CVFF)that currently stands at about N44.6 billion.

“Lest it be forgotten, what is on the lips of almost every shipowner, is the need to disburse the Cabotage Vessel Financing Fund (the CVFF’), which was established by the Coastal and Inland Shipping Act, 2003. It was established to promote the development of indigenous ship acquisition capacity, by providing financial assistance to Nigerian citizens and shipping companies wholly owned by Nigerian operating in the domestic coastal shipping, to purchase and maintain vessels and build shipping capacity. 

“Research shows that this fund has grown to about N44.6billion; and that due to its non-disbursement, financial institutions have repossessed some vessels, resulting in a 43% reduction of the number of operational indigenous shipping companies in Nigeria, in the past few years. 

“Without beating around the bush, to promote indigenous maritime development, prompt action must be taken by NIMASA to commence the disbursement of this Fund to qualified shipowners pursuant to the extant Cabotage Vessel Financing Fund (“CVFF”) Regulations.

Mike Igbokwe (SAN)

“Indeed, as part of its statutory functions, NIMASA is to enforce and administer the provisions of the Cabotage Act 2003 and develop and implement policies and programmes which will facilitate the growth of local capacity in ownership, manning and construction of ships and other maritime infrastructure. Disbursing the CVFF is one of the ways NIMASA can fulfill this mandate.

“To assist in this task, there must be collaboration between NIMASA, financial institutions, the Minister of Transportation, as contained in the CVFF Regulations that are yet to be implemented”, the legal guru highlighted further. 

He urged the agency to create the right environment for its stakeholders to build on and engender the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders.

“Lastly, which is the main reason why we are all here, cessation of ministerial waivers on some cabotage requirements, which I believe is worth applause in favour of NIMASA. 

“This is because it appears that the readiness to obtain/grant waivers had made some of the vessels and their owners engaged in cabotage trade, to become complacent and indifferent in quickly ensuring that they updated their capacities, so as not to require the waivers. 

“The cessation of waivers is a way of forcing the relevant stakeholders of the maritime sector, to find workable solutions within, for maritime development and fill the gaps in the local capacities in 100% Nigerian crewing, ship ownership, and ship building, that had necessitated the existence of the waivers since about 15 years ago, when the Cabotage Act came into being. 

“However, NIMASA must ensure that the right environment is provided for its stakeholders to build and possess the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders. Or better still, that they are solved within the next 5 years of its intention to stop granting waivers”, he further explained. 

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Breaking News: The Funeral Rites of Matriarch C. Ogbeifun is Live

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The Burial Ceremony of Engr. Greg Ogbeifun’s mother is live. Watch on the website: www.maritimefirstnewspaper.com and on Youtube: Maritimefirst Newspaper.

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Wind Farm Vessel Collision Leaves 15 Injured

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…As Valles Steamship Orders 112,000 dwt Tanker from South Korea***

A wind farm supply vessel and a cargo ship collided in the Baltic Sea on Tuesday leaving 15 injured.

The Cyprus-flagged 80-meter general cargo ship Raba collided with Denmark-flagged 31-meter wind farm supply vessel World Bora near Rügen Island, about three nautical miles off the coast of Hamburg. 

Many of those injured were service engineers on the wind farm vessel, and 10 were seriously hurt. 

They were headed to Iberdrola’s 350MW Wikinger wind farm. Nine of the people on board the World Bora were employees of Siemens Gamesa, two were employees of Iberdrola and four were crew.

The cause of the incident is not yet known, and no pollution has been reported.

After the collision, the two ships were able to proceed to Rügen under their own power, and the injured were then taken to hospital. 

Lifeboat crews from the German Maritime Search and Rescue Service tended to them prior to their transport to hospital via ambulance and helicopter.

“Iberdrola wishes to thank the rescue services for their diligence and professionalism,” the company said in a statement.

In the meantime, the Hong Kong-based shipowner Valles Steamship has ordered a new 112,000 dwt crude oil tanker from South Korea’s Sumitomo Heavy Industries Marine & Engineering.

Sumitomo is to deliver the Aframax to Valles Steamship by the end of 2020, according to data provided by Asiasis.

The newbuild Aframax will join seven other Aframaxes in Valles Steamship’s fleet. Other ships operated by the company include Panamax bulkers and medium and long range product tankers.

The company’s most-recently delivered unit is the 114,426 dwt Aframax tanker Seagalaxy. The naming and delivery of the tanker took place in February 2019, at Namura Shipbuilding’s yard in Japan.

Maritime Executive with additional report from World Maritime News

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