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MTN bond yields soar to record as shares fall to 3-year low

By on November 4, 2015

MTN Group Limited’s dollar bonds plunged for a third day, driving yields to record highs, as shares in Africa’s largest mobile phone operator extended a decline to a three-year low amid a lack of clarity over a $5.2 billion fine the company faces in Nigeria. Trading in MTN stock was suspended for more than three hours on Monday pending a statement from the Johannesburg-based company, in which it said talks with Nigeria’s regulator were continuing, without giving details. According to Bloomberg, the shares fell 6.1 per cent after trading resumed to 148.17 rand by the 5 p.m. close in Johannesburg, the lowest since July 2012.

The shares had dropped as much as 9.7 per cent before trading was halted following a report by CAJ News in Nigeria that MTN had failed to convince the Nigerian Communications Commission to lower the penalty. MTN hasn’t agreed to the fine and continues to meet with Nigerian authorities to challenge it, a person familiar with the matter told Bloomberg, asking not to be identified because the matter is private. The trading was lifted only after MTN issued a statement urging investors to exercise caution before reacting to information on talks between the company and Nigerian regulators.

“It’s difficult to know exactly what’s going on,” chief executive officer of Independent Securities (Pty) Limited, which owns MTN stock and has no current plans to sell, Simon Fillmore said.

“There is already a lot of bad news priced into the share price, but it all depends on the quantum of the fine when it comes out. There’s much uncertainty at the moment.”

Yields on $750 million of bonds due November 2024 rose28 basis points to 6.17 percent, an all-time high. Rates on the notes have climbed 141 basis points over the past six days, the worst performance out of more than 1,000 securities tracked by the Bloomberg USD Emerging-Market Corporate Bond Index.

Union Bank Unveils ‘UnionKorrect’ Savings Account

Union Bank of Nigeria Plc yesterday launched a new savings account product. The account, the ‘UnionKorrect’ allows customers win extra cash up to N1 million in quarterly draws when they save.

The product is aimed at helping customers develop a savings culture.

Speaking at the launch of the product in Lagos, the Head of Retail Banking, Union Bank, Mr. Carlos Wanderley, said the product is available at any Union Bank branch.

He explained that the ‘UnionKorrect’ account is as a sub-account to be linked to the current or savings account of a customer. All a customer need to do transfer N5,000every month from his or her main account at Union Bank to the UnionKorrect account, he added.

“When I came to Nigeria, One thing I noticed is that a lot of Nigerians use their savings account as a transaction account. So, at the end of the day, their monies do not stay in their account for the purpose of saving for the future as they want. And there are no incentives for such account holders.

“So, what we have done is to improve the ability for people to maximise their savings, and that is what theUnionKorrect account is all about. You save for a tenor of two or four years, enjoy interest on your savings and you stand a chance of winning a fantastic cash prize every quarter.

“So, at the end of the period, 300 people among 10,000 customers of Union Bank would be getting cash reward of between N100,000 and N1 million. A customer can have as many UnionKorrect accounts as they wish,” he said.

Also, the Head, Retail Products, Union Bank, Mr. SheahanArasaratnam, explained that the idea of having 10,000 customers participate in the first tranche is to make it possible for a lot of customers to have a chance to win.

What we are trying to do is to help Nigerians imbibe the culture of saving and they get rewarded for it. When you save, in four years you can have a lump sum of money to achieve your dream.