The Central Bank of Nigeria (CBN) and the Asset Management Corporation of Nigeria (AMCON) have last week, Friday, in Abuja , signed an agreement on the financing of N3.8 trillion bonds over the next 10 years. Speaking at the signing agreement, CBN Governor Sanusi Lamido Sanusi, said AMCON has concluded plans to pay-off N1trillion of the entire series 1, 2, 3, and 4 bonds held outside of the CBN on December 30 . Sanusi signed on behalf of the CBN while the Managing Director of AMCON, Mr Mustafa Chike-Obi signed on behalf of the corporation. The governor said the agreement was a major milestone in the resolution of the banking sector crisis which began in 2009. The governor said by October next year, additional N1tn bond for series five would be redeemed by AMCON. Sanusi said that having issued bonds of about N5.7tn that enabled AMCON to put money into the balance sheet of banks thus improving their liquidity, there was need for the corporation to begin the redemption of these bonds. He said, "The N5.7tn includes interest component, the amount AMCON owed is N3.8tn. 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 N5.7tn worth of AMCON bond, on December 30th AMCON is going to cancel by paying off N1tn 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 N1tn which is series five held by bank and other institutions." When this is done, the governor said the only creditor to AMCON will 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," he said. Also commenting on the implication of the agreement, Chike-Obi said the first step of the pact would enable the corporation reduce its obligation by 30 per cent. He said: "The implication of this agreement is that AMCON is on its first step of reducing its obligations from N5.7tn to N3.8tn 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 " He said AMCON still had a lot of debt to recover, adding that the corporation will continue to dispose off asset to enable it redeem its obligation. He said the AMCON had received lots of interests from institutional investors for the acquisition of the three nationalized banks, adding that for Enterprise Bank alone, 24 investors have indicated their interest to acquire the bank. "We still have a lot of asset 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," he concluded.
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