|
Getting your Trinity Audio player ready...
|
Access Bank Plc, Nigeria’s fourth largest lender by assets, would be looking to raise as much as $350 million from offshore investors this year, in what may be the first tranche of a $1 billion Eurobond, sources familiar with the matter told BusinessDay.
“Access bank released a bond prospectus on the Irish Stock Exchange showing its plans to raise a total of U.S $1 billion under its Global Medium Term Note Program- the amount to be borrowed in this series is yet to be announced,” investment bank, Cardinal Stone partners Ltd said in a note to investors Tuesday.
Access Bank, which has $12 billion of assets, has two deals outstanding; one of $350 million due in July next year and another of $400 million maturing in June 2021. Other sources say the proposed Eurobond is to meet refinancing obligations.
“We note however that Access Bank has sufficient dollar liquidity from its $800 million in off balance sheet swaps to redeem the debt but rather prefers refinancing to further strengthen its FX balance sheet,” Cardinal Stone noted.
The proposed Eurobond, with a five year tenor, is the first from Nigeria in almost two years and the company’s chief executive officer, Herbert Wigwe disclosed Monday that “It will be for working capital, for lending to investment-grade names,” including Nigerian companies seeking to expand their exports.”
Wigwe further said that Barclays Plc, Citigroup Inc. and JPMorgan Chase & Co. will arrange the deal, as they commence a road show in the US and Europe today, to ensue till Wednesday.
It would be the first Eurobond out of Nigeria since October 2014, when oil company Seven Energy Finance Ltd. issued $300 million of securities. That year, Nigerian companies and banks including Access Bank, Zenith Bank Plc and FBN Holdings Plc sold $2.55 billion of dollar debt, according to data compiled by Bloomberg. The Nigerian government, which is planning to raise $1 billion this year, last tapped the Eurobond market in 2013.
“The high cost of raising capital locally is driving banks and other corporates to the international debt market,” a source familiar with the matter told BusinessDay. “This is important given that the naira has shed significant value as against the dollar, and so dollar loans are much cheaper.”
Nigerian financiers have endured a rough start to 2016, getting their fingers burnt in their over exposure to the embattled oil and gas sector.
Dollar inflow is at a record low in Nigeria as crude prices bottom out and militant attacks reduce output. External reserves have plummeted to less than $25 billion, equivalent to some five months of imports.
This has translated to less dollar liquidity in the banks, who are still finding it difficult to adapt to newly introduced TSA which has mopped up public petrodollars from the banking system.
“You shouldn’t forget that a number of banks have Eurobond exposure,” Ike Chioke, the Managing Director of Lagos-based Afrinvest West Africa Limited said in a 2016 industry report titled “Nigerian Banking Sector Report.” “There are more than $2 billion maturing Eurobond obligations within the next few years. If we don’t find ways to allow more dollars into the system, this could be a potential problem to watch out for as they mature,” Chioke added.
Fidelity Bank’s $300 million Eurobond would be due by May 2018 while Guaranty Trust Bank’s $400 million will be due in May 2018.
Zenith Bank’s outstanding debt obligation of $500 million is also pending while Diamond Bank also has a $200 million Eurobond.
Nigeria’s largest bank by assets, First Bank of Nigeria Ltd, also has two Eurobonds – $300 million and $400 million – maturing in 2020 and 2021, as highlighted by Afrinvest.
