Thu | Dec 14, 2017

NCB bond hits target

Published:Wednesday | November 1, 2017 | 12:00 AM
Steven Gooden, CEO of NCB Capital Markets Limited.

Shares in NCB Financial Group (NCBFG) have been climbing since the banking group announced the placement of a new corporate bond to raise US$105 million ($13.36 billion).

NCB Financial hit the fundraising target on Tuesday, but the market reaction was muted.

For the month of October, up to Monday, the NCBFG stock climbed 23 per cent to $107.02, but on Tuesday the price fell to $105 around midday, but eventually recovered to $107.03 per share.

The bond, arranged by subsidiary NCB Capital Markets Limited, comes within the context of a fairly liquid US dollar money market, with investors seeking lucrative investment options for their money. The bond will pay interest semi-annually at seven per cent per annum, and matures in five years in October 2022.

"We can say that we successfully raised the bond today," NCB Capital Markets CEO Steven Gooden told Gleaner Business.

The banking conglomerate is expected to use the bond proceeds to finance new deals.

"NCBFG is building its financial arsenal to pursue various investment opportunities both in the local and regional markets," said President and Group CEO Patrick Hylton in a full-page press advertisement announcing the bond offer on October 8.

"With this expansion comes the opportunity to diversify our revenue streams; it is our intention to continue maximising on our regional interests through a combination of strategic investments, joint ventures, mergers and acquisitions that will stimulate further business," Hylton said in the statement.

Some market analysts have interpreted that to mean that NCB Financial could seek to increase its stake in Guardian Holdings.

Asked about the possibility of acquiring additional shares in Guardian, Gooden said the company does not comment on such matters as a matter of policy.

NCB Financial now owns 29.99 per cent of Guardian Holdings, a regional conglomerate with operations in 21 markets. It paid $28 billion for 65,547,241 ordinary shares in Guardian last year May.

"If they go after Guardian and fully acquire it, then what you have is a true regional powerhouse. It would be even larger than Sagicor," said the head of a local investment house, who commented on condition of anonymity.

"That would be massive," he said.

The new bond is NCB Financial's second large fundraising this year. The banking conglomerate previously raised $18.4 billion and that bond was subsequently listed on the Jamaica Stock Exchange (JSE). It became the largest debt security to list on the JSE bond trading platform, alongside a tiny pool of corporate bonds.

steven.jackson@gleanerjm.com