The desire to actively finance the activities of investors in the power sector has driven a lot of Nigerian banks to the debt market.
The search for long-term capital by the banks is to support the long-term financing needs of most firms that acquired the generating and distribution companies in
THISDAY checks showed that while some banks have already raised the amount of capital they need to support their clients from the Eurobond market, the rest are still weighing other available capital raising options.
On the other hand, while
Other banks that had also tapped from the Eurobond market include
Despite the fact that the federal government last year sold 15 power generation and distribution companies, power supply in the country has remained epileptic.
The Managing Director/Chief Executive Officer,
"Traditionally banks have short-term deposits. So, if they want to lend long-term, if they use their current stocks of dollar, then it is a mismatch because that is short-term dollars and long-term loans.
"So, they try to lengthen the amount of liquidity they have. The second reason is capital. They need tier-11 capital in order to support their balance sheet," he added.
Hafeez described capital market as the deepest source of liquidity in the world, adding that another advantage of going to the capital market is that it helps financial institution to benchmark their rating.
"Remember, you can't go to the international capital market without meeting very high standards of governance," he said.
On his part,
"They will need to raise more funding for the financing of power, oil and gas and infrastructure projects," he added.
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