Access Bank launches N194 Billion commercial paper: Takeaways for investors

The offering is structured into two series: Series 3 and Series 4 with varying tenors and yields.

Providing a clearer picture, the discounted rate is the percentage discount applied when buying commercial paper. Instead of paying the full-face value upfront, investors buy it at a lower price and receive the full value at maturity.

On the other hand, effective yield represents the actual return an investor earns over the investment period, taking into account the time value of money.

Since commercial papers are sold at a discount and redeemed at full value, the effective yield is higher than the discounted rate because it reflects the true percentage gain over the holding period.

Access Bank intends to use the proceeds from the CP issuance to meet short-term funding needs, including working capital requirements and general corporate purposes.

The Group is a diversified financial institution that combines a strong retail customer franchise and digital platform with deep corporate banking expertise, proven risk management and capital management capabilities.

As of Q3 2024, the bank reported total assets of N40.6 trillion, while customer deposits stood at N22.3 trillion

Gross earnings surged by 114.49% YoY to N3.418 trillion, driven by its core banking operations:

Access Bank’s borrowing levels also increased, with total debt and borrowings reaching N3.771 trillion, a 52% rise YoY.

Agusto & Co. affirms the “Aa” credit rating assigned to Access Bank Plc (“Access Bank” or “the Group”), reflecting its position as Nigeria’s largest bank by total assets and its growing franchise across the African continent.

The Group’s strong capitalisation, solid asset quality, robust refinancing capability, and experienced management team underpin the rating.

However, the rating is tempered by global economic fragility, a relatively high-cost profile compared to other Tier-1 banks, and challenges in key African markets.

Agusto & Co. also assigned an ESG score of “2”, indicating that environmental, social, and governance (ESG) factors have minimal impact on the bank’s credit profile.

In contrast, the Series 3 CP effective yield of 21.50% is below the inflation rate, meaning the real return may be negative when adjusted for inflation.

Treasury bills, backed by the federal government, are virtually risk-free, while Access Bank’s CPs carry higher risk but also offer potentially higher returns.

Treasury bills, backed by the federal government, are virtually risk-free, while Access Bank’s CPs carry higher risk but also offer potentially higher returns.

Investors seeking higher returns and willing to take on moderate corporate risk may find Access Bank’s Series 4 CP more attractive than Treasury bills and FGN bonds.