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Access Bank has agreed that it would pay off a $200 million Eurobond issued by Diamond Bank in 2014.
The issuer had attempted to raise between $300million and $350 million at the time to meet its funding requirements which was cut back to $200 million after investor demand fell below expectation.
In a report published on Wednesday, Moody’s Investor Service said Access Bank has reduced the risk of default for investors by taking on the liability.
The bank completed a merger process with Diamond Bank in March to become Nigeria’s largest bank.
“Access Bank is now responsible for all of Diamond Bank’s liabilities and confirmed it will repay at maturity a $200 million bond originally issued by Diamond,” said Peter Mushangwe, analyst at Moody’s.
“Access has stronger liquidity than Diamond, sharply reducing the risk of default.
“Diamond Bank’s attempt to become a leading Nigerian retail lender led to a build-up of non-performing loans that ultimately threatened its solvency. Its liquidity management was also poor, leaving it with insufficient foreign currency balances to cover near-term obligations.”
Moody’s, which is a financial services company headquartered in New York, described Access Bank as “more stable board and a higher concentration of independent directors, which enhances the quality of its board oversight”.
