1. Issuer: this means the person you are lending your cash to in return for the paper called the Bond.
With Bond the KEY RISK is the Issuer.
A Venezuela Bond is more risky than a Bond issued by Switzerland.
Get my drift?
Sponsor: this is the financial house packaging the bond on behalf of the issuer
Securities and Exchange Commission registers and regulates these Issuing houses.
Program Size: this is the TOTAL amount authorized by the issuer to raise via bonds.
Issue Size: This is how much the Issuer/Sponsor are now offering to investors from that Program Size.
Description: this explains the bond
Series 2: means second issue from program
Fixed rate: intrest paid is fixed and advised NOW.
Subordinated: Means this bonds is below another borrowing already done by issuer
Unsecured: Bond NOT secured by any collateral just cashflow
Sponsor and Issuer Rating: All bonds are rated (this is another thing you can ask for)
Bonds by Switzerland and US Government are rated AAA...very safe.
Agusto and DataPro are a Nigerian registered rating company
Other examples of rating companies are Fitch, GCR, & Moody
Price Guidance....this is the indicative offer price lenders will earn if they buy this bond.
Tenor: 10 years, you invest today, you will get that say 5%, paid to you every year for 10 years. Normal practice is to pay twice a year. Thus 2.5% every 6 months
Par Value: look at this as the starting unit price per share. So each unit of this offer will be sold at N1,000 PER UNIT
This means If the bond price appreciates, it's can be quoted at say N1,002...a N2 gain.
Issue and Maturity Date: Date Bond opens to investors and date Bond closes to investors respectfully.
Settlement Date: Date sponsor will settle proceeds....or date offer will close to primary investment.
Date count: Actual...just nomenclature
Ranking: similar to Description
Its a direct loan, that is not secured and will/can claim assets of issues AFTER the senior debt holders have claimed in the event of bankruptcy.
Offer Mode: Offer for Subscription
Meaning the Sponsor/issuing House and other financial institutions will offer this Bond to investors to subscribe to.
Book build means as investors subscribe and indicate their yield the "books" ie offer yield will be built..(5 or 6%)
Coupon Rate: Fixed
This means whatever coupon is agreed, that number and payment is fixed for 10 years advised
So what can change? The Yield..
Coupon and Yield are not same thing. Once bond starts trading its Yield is either at discount or premium to Coupon.
Units of Sale:
How many units or N1000 must you buy? i.e. the minimum
In this case it's N10m then if you want more, you can buy in block units of N1m
Principal Redemption Basis
How will you get your principal back? Remember intrest will be paid to you every year
Bullet means a one time lump sum repayment
So by 2030, if you invested N10m you get back N10m plus all those annual interest payments you received for 120 months
Call: Pay Attention to this...
This means this 10 year loan can be CALLED back after 5 years by the issuer and you will be repaid your principal ..
This means you MUST plan this in. You may be exposed in 5 years with your cash and no 5% investments to place it in.
Listing: After the book building, where can you buy this bond?
It will be LISTED for Secondary market transactions on the Nigerian Stock Exchange and the OTC FMDQ Securities Exchange
Use of proceeds;
Where is the borrowed cash going.
In this case the issuer is actually a "special company" of the sponsor....altogether legally separate. So FBNQuest is simply using that "special purpose vehicle" to borrow N10b from the market
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United Capital Trustee v FIRS, very interesting...
In summary, United Capital (UC) paid dividends to parent coy in excess of total profits. FIRS thus invoked Sec 19 of Corporate Income Tax Law to claim tax on that excess distribution.
please read.
UC in their defense said they relied on an "exemption order" issued by the President of Nigeria called the Companies Income Tax (Exemption of Bonds and Short Term Government Securities) order 2011
UC and FIRS went to the tax appeal tribunal, this tax even followed a review of books from 2011 to 2016.
The Tribunal held that "Executive Orders are inferior to the Corporate Income Tax Law...."