The Asset Management Corporation of Nigeria (AMCON) has planned to pay off all outstanding AMCON obligations to all private sector investors by December 2014 leaving the Central Bank of Nigeria (CBN) as its only creditor.
Governor of the CBN, Sanusi Lamido Sanusi explained that the apex bank has reached an agreement with AMCON for the ‘bad bank’ to retire all existing bond series maturing in 2013 and 2014 and to reissue a new a N3.6 trillion bond to be held by the CBN under a new refinancing and restructuring arrangement within a period not exceeding ten years at single-digit interest rate.
The Monetary Policy Committee (MPC) commended the CBN over the repayments and refinancing arrangements saying it would have no adverse monetary policy implications, but would increase confidence in the financial system.
“In December this year AMCON will pay off N1.1trillion, AMCON has series one bonds maturing in 2013 and will also call in all holders of series 2, 3 and 4 maturing in 2014. AMCON will issue a new bond of N3.6 trillion which we will invest in and that will be used to refinance our entire exposure at an interest rate of 6 per cent over 10 years”
According to him, AMCON currently has over N800 billion in assets and at the end of this year, it will build that up to over N1 trillion.
“The result of this is that by October 2014, the only creditor to AMCON will be the CBN, every other person holding AMCON bonds will be paid off as at when due. This pay off will not be in the form of an injection of N1 trillion cash into the system. We already compelled AMCON to convert them into securities. So these securities are going to change.
What you’re going to have is that by December, the balance sheet of AMCON will reduce by N1.1 trillion. And by October next year, the balance sheet will shrink by another N1 trillion, down to N3.6 trillion.