The Nigerian banks are starting to pile into their local bond markets. Guaranty Trust Bank is seeking approval for a N200bn ($1.3bn) debt issue. This follows similar plans at First Bank (N500bn) and marks a much anticipated return for the banks who have dormant in issuance for three years. Likewise, Access Bank has also drafted plans to issue debt.
We would caution that a major credit risk is the potential for over-issuance of debt. In the interim, however, we look forward to observing the development of a much needed yield curve in Nigeria which will enable the banks to see longer term business objectives met as well as the potential for investors to play relative value investment strategies.