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Access Bank To Sell Nigeria’s First Eurobond In Two Years

Access Bank To Sell Nigeria’s First Eurobond In Two Years

Nigeria will sell its first Eurobond in two years after Access Bank Plc  started off a campaign to attract investors in the U.S. and Europe by early next month.

The lender did not disclose the amount it intends to raise from the initiative but said the funds will be used to provide working capital for different companies.

The bank has engaged the support of Barclays Plc, Citigroup Incorporated and JPMorgan Chase 7 Co to realize the five-year debt deal.

“It will be for working capital, for lending to investment-grade names, including Nigerian companies seeking to expand their exports,” Herbert Wigwe, Access Bank’s Chief Executive Officer told The Government Business Journal.

Access Bank is the fourth biggest bank by assets in Africa’s second largest economy. The lender already has two deals set to mature in the next five years.

A senior bond worth $350 million will mature in July next year, while a subordinated one, worth $400 million will be realized in June 2021, Bloomberg reported.

This will be first time in two years when Africa’s most populous nation last floated a Eurobond.

In October 2014, Seven Energy Finance Limited, an oil company issued securities worth $ 300 million.

Nigeria’s economy is in crisis due to a global fall in oil prices. Its national currency, naira, is performing dismally against the dollar.

In August, the government started plans to raise over $1 billion in Eurobond to plug a budget deficit of 2.2 trillion naira, Business day Live reported.

Several lenders in the nation, including Diamond Bank, First Bank of Nigeria and Zenith Bank, are seeking to raise capital from the international debt market.

The high cost of raising capital in the domestic market is a major reason that drove banks to the international debt market, This Day reported.

Nigeria’s budget for 2016-2017 is a record $19.3 billion (6.1 trillion Naira) after the nation increased spending to fuel growth and stem a fall in foreign exchange earnings. The nation has a total debt of $60 billion which has further hurt its ability to borrow.

The West African nation uses about 80 percent of its revenue earnings to pay debts, making it one of the nations in the world using the greatest percentage of their revenues for debt repayment, Vanguard reported.

Its over-reliance on oil to grow its economy plunged the nation into a crisis. Analysts urged the government to diversify its economy and exploit its huge agricultural potential.

The International Monetary Fund (IMF) predicted the nation’s economy to shrink by about 1.8 percent this year.