Baring any last minute change, Access Bank, Nigeria’s fourth largest bank by asset base is set to sell Eurobond to raise its working capital and providing credit to investment-grade blue chips.
According to sources at Bloomberg, Access Bank officials, will from today (27th of September, 2016), embark on a debt issuance campaign to target European investors. The Eurobond sales is planned to end by the end of October.
This means Access Bank has the next 30 days to convince investors that it is worth investing in the first place.
Barclays Plc, Citigroup Inc. and JPMorgan Chase & Co. are its advisers and consultant in the debt issuance campaign. While Access Bank has not disclosed how much it is planning to raise, the bank already has pending debts that will be due for payback.
By July 2017, Access Bank must pay back USD350 million and by June 2021, the bank must redeem its pledge on USD400 million bond to investors.
The challenge with this kind of deals is that the devaluation of the Naira (NGN) would greatly impacts its ability to pay back without affecting its bottom line. This is because these bonds were sold to investors when the the Naira was about NGN170 to USD1. The fall in the value of the local currency is definitely going to affect how it meet up with its obligations.
In July, Fitch Ratings gave Access Bank the ratings below
Long-Term Foreign Currency IDR: affirmed at ‘B’; Stable Outlook
Short-Term Foreign Currency IDR: affirmed at ‘B’
National Long-Term Rating: affirmed at ‘A(nga)’
National Short-Term Rating: affirmed at ‘F1(nga)’
Viability Rating: affirmed at ‘b’
Support Rating: affirmed at ‘4’
Support Rating Floor: affirmed at ‘B’
Access Finance BV’s senior notes, guaranteed by Access Bank: affirmed at ‘B’/’RR4’
Subordinated notes: affirmed at ‘B-‘; Recovery Rating affirmed at ‘RR5’
Other Nigerian banks who have sold Eurobonds are Zenith Bank Plc and FBN Holdings Plc sold USD2.55 billion of dollar debt.
