NCB Financial Group Limited (NCBFG) will be tapping the capital markets over the next two months to raise $15 billion to refinance maturing debt.

The unsecured corporate bonds opened on July 15 and are split across three tranches with maturities ranging from two to five years. Interest is to be paid semi-annually on each. The bonds offered in tranche A offers an 11.50 per cent interest and will be for two years with NCB Financial Group aiming to raise up to $2.5 billion from it. Tranche B is offering a 12 per cent coupon for three years with the aim to raise up to $7.5 billion and tranche C is offering a 12.50 per cent coupon for five years aiming to raise up to $5 billion.

NCBFG reserves the right to upsize any tranche subject to all three tranches raising $15 billion. The minimum buy in is $100,000 with trading blocks of $10,000, but the bonds will not be listed on any stock exchange. The offer is set to close on August 29 and be issued by September 9.

The impact of refinancing this large debt maturity is that NCBFG’s interest expense cost is likely to jump considering that some of the upcoming September maturity was priced at 6 per cent. This is NCBFG’s latest aim to address its holding company debt maturities of $36.84 billion in its 2024 financial year ending September 30. NCBFG’s next investor briefing is set for August 9.

NCBFG sought to cut down a portion of its debt balance through raising additional equity in May, but the stand-alone holding company was only able to raise $2.48 billion relative to the $5.097 billion it sought. Prior to the equity raise, NCBFG sought to raise $9.5 billion and US$26.63 million ($4.11 billion) in debt refinancing between February to May, which was described as being successful as per NCBFG’s Chief Financial Officer Malcolm Sadler at a May investor briefing. NCBFG’s senior unsecured bond offer, which closed on May 6, was offering interest rates between 11.25 – 12.50 per cent.

NCBFG has expanded its funding sources in its latest set of debt raises which are priced at $100,000 to allow for smaller investors to buy in. The prior bond offers were also restricted to accredited investors and investors who could afford the minimum purchase of $10 million/US$65,000.

Guardian Holdings Limited, a 61.77 per cent controlled NCBFG subsidiary, will be having a $1.99 billion debt maturity in September 2025 on its series B bond (6.50 per cent) which is listed on the JSE Private Market. This is on top of a TT$1.02 billion bond at 5 per cent maturing in December 2025.

NCBFG’s re-entry to the capital markets might also impact other companies seeking to refinance or raise debt in what has been described as an environment characterised by tight liquidity. Mayberry Jamaican Equities Limited, an equity holding company, raised $3.38 billion in its recent bond offering which had interest rates of 9.25 -10.50 per cent across three tranches ranging from 13 – 36 months.

However, other financial companies and private companies have been seeking debt extensions on their maturing debt. It’s yet to be seen how the market will respond to these additional requests for debt extensions when some market rates might be gone if interest rates start to cool into 2025.