Nigeria’s Access Bank plans to use part of a $300 million eurobond it issued last month to help repay an existing eurobond due to mature next year, its chief executive said on Tuesday.
The top tier Nigerian lender issued the five-year paper with a 10.5 percent coupon last month in the face of dollar shortages at home caused by an oil price slump which has pushed the economy into its first recession in 25 years.
CEO Herbert Wigwe said the “essence of the eurobond was to make sure that we have enough buffer and to refinance our current one maturing,” he said, adding that the bank would also increase dollar lending to businesses generating hard currency.
“On the pricing alone 10.5 percent looks high but if you put it in context of the background of dollar shortages then you will see that it was successful,” he told analysts on a call.
In addition to last month’s issue, Access has a $350 million 7.25 percent bond maturing in July 2017 another $400 million with a coupon of 9.25 percent due in 2021. Wigwe said the bank was confident it would meet all obligations.
Foreign correspondent banks to Nigerian lenders have been worried this year about a risk of default on their trade lines due to dollar shortages in Nigeria and as the central bank rationed its own hard currency to save its dwindling reserves.
Nigeria, whose credit rating was downgraded by Standard and Poor’s to B in September from B+, wants to issue a $1 billion eurobond by the end of the year although it has yet to appoint banks to arrange the sale.
Finance Minister Kemi Adeosun has said the country has $500 million of commitments for the planned bond and that any decision to increase the size of the offer would depend on pricing.