Access Bank to Repay $400m BondTwoYears Early

Access Bank Plc plans to redeem a $400 million subordinated Eurobond due in 2021, two years early as Nigeria’s fourth-largest lender seeks to reduce funding cost. Prices on the notes rallied the most since August 10, pushing yields lower.

According to Bloomberg, the bank would repay investors next year, as the bond, issued in June 2014, no longer qualifies as capital five years after being sold. The bank’s Chief Financial Officer, Seyi Kumapayi, disclosed this.

The Central Bank of Nigeria allows lenders to count certain classes of debt and equity among the buffers they need to set aside to survive market turmoil.

Access Bank is rejigging its debt after yields on the 2021 bonds started rising from a record low in October last year amid an emerging-market rout.

The lender is exploring other sources of funding, which may not be a Eurobond, to keep its capital adequacy ratio at about 20 per cent, more than regulators require, the CFO said.

This may include retaining some of its profit as capital rather than distributing the cash as dividends to build buffers after settling the bonds, Kumapayi said. Access Bank, which has N4.5 trillion ($12 billion) in assets, has another $300 million senior bond issued in 2016 that would mature in October 2021. Other big Nigerian lenders including Zenith Bank Plc, United Bank for Africa Plc and Fidelity Bank Plc raised dollar funds in the past two years to bolster their capital buffers after a 2016 contraction triggered a surge in non-performing loans.

Access Bank recently received a $50 million repayment on a loan to 9mobile, the company previously

know as Etisalat Nigeria until it was taken over by creditors in 2017, after defaulting on loans.

Nigeria’s fourth-biggest mobile carrier is repaying debt after being bought by Teleology Holdings Limited.

The repayment reduced the bank’s exposure to the firm to about N45 billion, Kumapayi said.