Access Bank (biggest subsidiary of Access Holdings) yesterday opened its commercial paper issue. A commercial paper is short term borrowing by a company.

Issue details

The Series 1 and 2 Commercial Paper Offer is for up to ₦200 Billion under its ₦400 billion commercial paper programme

Series 1 has a tenor of 180 days and a discount rate of 20.6%.

Series 2 has a tenor of 365 days and a discount rate of 20.3%

The offer opened yesterday and is scheduled to close on Thursday, February 20, 2025.

In the rights issue circular issued last year, the Holdco stated that

The proceeds from the Issue will be used to (i) enhance Access Bank’s capital adequacy, in compliance with the regulatory capital requirements, thereby deepening the Bank’s ability to withstand systemic shocks, and (ii) strengthen the Bank’s fortress balance sheet, allowing it to meet its and other banking subsidiaries’ growth needs, in line with the Group’s medium-term strategic objectives.

The rights issue was fully subscribed with N350 billion raised.

The net issue proceeds estimated at N343,091,495,029.73 (after deducting issue costs of N7,917,607,987.52 representing 2.26% of the Issue) will be utilized to support growth need for Access Bank Plc as stated below

Below is the outline of how the proceeds are expected to be used as stated in the prospectus.

What’s the rationale?

I find the issuance baffling in light of the recent capital raise. N200 billion is a significant amount of money. Why raise this as a CP when the firm could have raised equity?

The rights issue proceeds have yet to be fully deployed. So what could be the urgent need?

More importantly.

Why wasn’t a notice sent to the NGX? Given that the parent company is listed. The usual tradition is for companies to either disclose when CP raises kick off or are under consideration