The role of “Corporate Trustees’ in capital market debt issuances is primarily hinged upon investor protection while not jeopardizing the interests of the Issuer.”
STL Trustees Head of Trust Services, Akin Oni, shared this view during his presentation at a recent webinar organized by STL Trustees Limited titled, “The Role of Corporate Trustees in Capital Market Debt Issuances”.
He analyzed that at every point in time when an Issuer comes to the capital market to raise capital for various developmental projects or working capital requirements, investors come together to provide the required funding to meet the Issuer’s funding need. It is statutorily required that a corporate trustee be engaged to oversee the trust arrangement between the Issuer and the bondholders and the role of the Trustee includes ensuring that the fund so raised is judiciously utilized in line with the use of proceeds as contained in the transaction documents so as not to jeopardize the interests of the investors, ensuring repayment of both the coupon and principal of the bondholders as at when due amongst other critical roles.
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Speaking on a sub-theme: Investor protection role of corporate trustees in debt issuances, Oni explained that in a debt issuance transaction, Corporate Trustees, in a bid to protect the interest of the bondholders must perform the following specific roles: documentation, custodianship of relevant legal documentations, supervision of terms and compliance thereof, Management of the Sinking Fund, insurance, valuation, inspection, and where necessary/applicable, ensuring realization and distribution of assets, rendering necessary reports to relevant stakeholders and taking legal action to defend the assets under trust, etc.
“One of the most critical aspects of a corporate trustee’s role is the documentation. This is because it is what you document that you will execute and without proper documentation, an Issuer may get away with so many infractions that could portend potential default in meeting its obligation to bondholders. Hence, it is imperative for a corporate Trustee to be well knowledgeable and also have the requisite expertise and capacity to focus on creating a water-tight documentation that would ensure a seamless transactional experience for all Parties throughout the life of the transaction.” He said.
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Also, speaking at the webinar, Funmi Ekundayo, the Managing Director/ Chief Executive Officer of STL Trustees, added that for any capital market to thrive and grow, investors’ confidence in the market is crucial.
She analyzed that it is the confidence that investors have in the capital market that will attract and encourage them to commit their hard-earned financial resources into the market by way of investment and that the key role of corporate trustees in capital market transactions revolves around the protection of investors’ interests and confidence.
The webinar titled, “The Role of Corporate Trustees in Capital Market Debt Issuances”, was aimed at filling the knowledge gap around the wealth of services that corporate trustees provide, especially in capital market transactions.
STL Trustees Limited is a leading corporate trustee in Nigeria with over three decades in the business of trusteeship. STL possesses significant transactional experience across different sectors of the economy. It has participated as a Trustees in different groundbreaking capital market transactions with novel structures and different transactional dynamics some of which include the first infrastructural fund in Nigeria, the first sovereign Sukuk issued in Nigeria by the federal government of Nigeria, and the first sub-national Sukuk in Nigeria capital market issued by Osun state government amongst others.