With Access Bank aiming to break the impasse on Nigerian Eurobond trades, Moody's says the top five banks from the country are facing common credit challenges ahead.
Access is preparing to sell a five-year US dollar note issue against a backdrop where the oil and gas dependent economy has slid into recession for the first time in more than 20 years. Annual inflation is in the high teens.
Moody's expects challenging operating conditions to continue for all five banks given the slowdown in the economy.
"However, despite shared credit challenges, there are differences among the banks in terms of their respective abilities to withstand weak economic growth and volatile monetary conditions," said Moody's analyst Akin Majekodunmi.
"Overall, Moody's views Zenith and GTBank as best placed to cope, followed by Access and UBA, and then FBN."
A banker away from the Access deal says investors are watchful over the country's economy.
"People are probably still quite cautious on Nigeria," said the banker.
"Access would have to pay significantly more than [IHS Nigeria], but at the same time they would be able to deploy dollars at juicy lending rates in Nigeria."
Access Bank's 2017s are trading at a yield above 7.3% according to Tradeweb, though in late January they were at nearly 12%. The new issue will have a minimum yield of 9% to entice investors.
(C) IFR News
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