Finance

Nigerian Access Bank issue $1bln worth of Eurobonds

Wednesday, 29 September 2021 21:10
Nigerian Access Bank issue $1bln worth of Eurobonds

(Ecofin Agency) - Access Bank is once again tapping the international debt market. The operation could enable the bank to meet the upcoming deadlines for the repayment of its dollar-denominated debt. The growing demand for foreign currency in Nigeria could also be an opportunity.

Nigerian banking group Access Bank seeks to raise $1 billion on the international bond market, we learned. On September 14, the bank raised $500 million on the market, with investor demand being three times higher than the offer. The operations are part of its mid-term international debt issuance program.

For the first transaction, Access Bank received an interest rate of 6.125% for a maturity of 5 years. Nigeria, where it concentrates 82.2% of its assets, is facing pressure on foreign reserves, so the banking group wants to secure as many foreign currency resources as possible before market conditions harden.

The bank is rated highly by rating agencies. On September 21, Fitch Ratings maintained a "B" rating for its long-term issuer profile, with a stable outlook. Moody's also expressed a favorable opinion on its medium-term international borrowing program. Despite the difficult economic environment in Nigeria, the group has managed to remain profitable and, above all, to reduce the level of risk on its loan portfolio. It has made particular efforts to reduce foreign currency loans in its portfolio. These loans have fallen from 40% in June 2019 to only 22% in late June 2021.

The group could also resume providing loans in foreign currencies. Nigeria's current foreign exchange crisis is proving to be an opportunity, especially with the central bank's decision to entrust the foreign exchange market exclusively to commercial banks. Also, sectors such as industry require dollar resources for imports.

The Bank does not have large debts to repay in dollars. According to calculations by Ecofin Agency, Access Bank's outstanding foreign currency borrowings repayable with interest were $837 million at the end of June 2021. This includes transactions that are directly charged to the group and others that are repayable by its subsidiaries. Also, the maturities on these loans are on average 5 to 6 years.



 
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