Johannesburg/Lagos - Access Bank plans to issue a $350 million five-year Eurobond with pricing in the 7 percent range, a banking source with knowledge of the deal told Reuters on Wednesday.
The bank is likely to benefit from strong demand among frontier market investors for scarce African bonds, and one analyst said a successful deal could encourage other banks to issue debt.
Access Bank will be the third lender from Nigeria to tap global capital markets. It has mandated Citigroup and Goldman Sachs and has been meeting with investors in Europe and the United States in the past week.
"The bond will be priced this week, and they are looking at yields within the 7 percent range," the source said.
Last October, Access completed the acquisition of a 75 percent stake in lender Intercontinental Bank, one of nine lenders rescued in a $4 billion central bank bailout in 2009 that has put the banking sector on a stronger footing.
Access follows Guaranty Trust Bank, which issued a $350 million 5-year bond in 2007, and First Bank , which launched a $175 million 10-year bond the same year.
A follow-up 2011 issue from GTB is currently trading around 5.8 percent.
Nigeria's debut sovereign $500 million Eurobond, issued in January 2011, was more than twice oversubscribed. The 10-year paper, priced with a yield of 7 percent, was trading at 5.43 percent on Wednesday.
There may be strong appetite for the Access deal given Nigeria's limited issuance, and if the deal goes well more banks could issue, said John Bates, head of fixed income at Silk Invest, a London-based investment house focusing on frontier markets.
"The banks tend to benchmark themselves off each other so the success of other banks coming to the market will depend largely on the success of this deal," he said.
First Bank said in April it was planning to sell a $500 million Eurobond this year. However, United Bank for Africa shelved its own plans to issue a bond of the same size.