By Emeka Anaeto
Amidst the impact of the Coronavirus (COVID-19) pandemic and a major change in the financial market in Nigeria, companies are now funding their businesses from huge borrowings in the money market as debt capital, leaving the equity market largely redundant.
Confirming this situation in an interview with Vanguard Newspaper, the Executive Director, Corporate and Institutional Banking at Standard Chartered Bank, Nigeria, Mr OlukoredeAdenowo, explained that debt capital, is now cheap in Nigeria today.
On the other hand, he also explained that companies are discouraged from going to the capital market to raise funds because of low valuation of stocks in the Nigerian Stock Exchange.
He stated: “You will not see many companies going into the stock market because of the low valuations. So, they will not go for equity capital, but they go for debt capital. So, for debt capital, a lot of it is happening because the interest rates are depressed.
“Huge sums are being raised by corporates within this COVID-19 period and within this year. Equity capital is muted because debt capital is cheap and not many large corporates are going for it today.”
On what Standard Chartered is doing in the situation, he stated: “We are arrangers, we are issuing houses. There are quite a few coming up in the next few months you will hear about them.
“Also we take them to the international financial market, we take them to meet international investors, banks, asset managers and we did quite a lot last year with the Nigerian government and sovereigns across West Africa.”