Access Bank holds investor call for Tier 1 Eurobond issue

Access Bank, a tier one lender in Nigeria, is currently making strategic moves in the global debt capital market through its Global Medium-Term Note Issuance Programme. The bank recently issued a successful $500 million Senior Unsecured Eurobond and is now gearing up for an additional five-year USD-denominated Tier 1 Eurobond. Egie Akpata, Director at UCML Capital, discussed investors' appetite for Nigerian USD paper in a recent CNBC Africa interview. Akpata highlighted key differences between the federal government's backing and a bank like Access Bank issuing Eurobonds. While the federal government relies on oil sales to service its debt, investors are more comfortable with the stability of their revenue streams. In the case of a large bank like Access Bank, the relatively small amount issued compared to the bank's total size and its operations outside Nigeria mitigate the risk for foreign investors. Access Bank's Global Medium-Term Note Issuance Programme, with a worth of $1.5 million USD, has attracted investor interest. The bank recently held an investors call, a structure that has been done only once before in Nigeria, indicating a unique and potentially fruitful opportunity for investors. In addition to its Eurobond activities, Access Bank announced a rupture for a USD perpetual fixed-rate resettable additional Tier 1 note. This move aims to boost the bank's Tier 1 capital without the dilution that comes with equity offerings. Akpata believes that the success of this issuance will pave the way for other Nigerian banks to explore similar transactions in the debt capital market. Looking ahead, Akpata shared his projections for the local corporate bond market. With the federal government's recent $4 billion Eurobond issuance, he anticipates a decrease in local bond issuances in Q4. While the corporate bond market may see slower activity compared to last year, due to higher interest rates, Akpata expects a pick-up in borrowing activities in Q4 before the new borrowing cycle begins in January. Reflecting on the year so far, Akpata noted a shift in the market dynamics, particularly in the issuance of commercial papers (CPs) by corporates. Earlier in the year, CPs were still viable options for corporates at lower interest rates, but with the increase in bond rates, CP issuance has become less attractive. Corporates are now faced with the challenge of competing against high-price deposits, leading some to opt for bond issuances instead. As Access Bank and other financial institutions navigate the evolving debt capital market landscape, strategic moves like Eurobond issuances and innovative debt instruments will play a crucial role in strengthening their capital positions and attracting investor interest.