FIRST National Bank of Namibia (FNB) has become the first bank to issue Basel III compliant Tier 2 capital notes worth N$500 million in Namibia.
Tier 2 capital notes are electronic securities that are traded on financial markets, such as the Namibian Stock Exchange (NSX).
Banks use capital notes as a type of debt instrument to raise capital. Tier 2 capital notes are considered a form of secondary capital.
In a statement issued on Wednesday, FNB said the notes were oversubscribed as the bank received bids to the value of N$725 million from 10 investors.
“The oversubscribed issuance put pressure on the pricing, ensuring that FNB Namibia received the best possible rates for the notes issued,” the statement reads.
The notes were issued off FNB’s NSX-listed Domestic Medium-Term Note (DMTN) programme, which was established by Rand Merchant Bank (RMB).
“RMB provided advice with regards to the establishment of the underlying terms of the notes, the DMTN programme, the arrangement, as well as the facilitation and listing of the bonds in the debt capital market,” notes the statement.
RMB is used for FirstRand Bank Corporate and Investment Banking (CIB) offerings in Namibia, South Africa, Nigeria and Botswana.
FirstRand Namibia group treasurer Selma Kapeng said the issuance will strengthen Namibia’s capital market.
“This new-to-market solution is further evidence of FNB Namibia’s commitment to deepen the Namibian capital market, connecting smart capital to ambitious enterprise. With bolstered risk capital, FNB Namibia is well positioned to deliver on its cardinal purpose of building a globally competitive Namibia,” said Kapeng.
She added that the DMTN presents an additional investment avenue for Namibian and international investors seeking top quartile risk-adjusted returns.
“Our client-centric approach is what guides us to design innovative solutions and originate multiple products to meet our clients’ unique needs.
“The successful outcome sets precedence for future issuance,” added Kapeng.
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