(Adds details, background)
By Chijioke Ohuocha
LAGOS, Aug 5 (Reuters) - Nigeria’s Access Bank and Union Bank have each issued a 30 billion naira ($98.09 million) bond taking advantage of falling yields on the local currency debt market, banks leading the bond sales said on Monday.
Access Bank sold a seven-year bond at a 15.5% yield, while mid-tier rival Union priced its 10-year bond to yield 16.2%. Union’s sale is part of a 100 billion naira debt issuance programme.
Yields in Nigeria’s local currency bond market have dropped from a high of 18% since the government redeemed some of its treasury bills in 2017 to lower borrowing costs. Yields on the one-year treasury bill were last auctioned at around 11%.
Union and Access Bank, which merged with mid-tier Diamond Bank in April, did not say how they would use the proceeds of the bond sales.
Nigeria’s central bank has said it would pursue a recapitalisation of the banking sector over the next five years after a series of currency devaluations weakened banks’ capital.
Fidelity Bank told Reuters last month it aimed to sell up to 50 billion naira in Tier II debt before the second quarter of next year to refinance existing bonds as yields decline.
The central bank has been pushing banks to lend to businesses and consumers to help revive the economy where growth rates remain low after a recent recession.
The bank has curbed a frequent sale of open market bills, which has also helped to drive yields in the local currency debt market lower.
The central bank had been tightening liquidity to curb inflation and attract foreign investors into bonds to support the naira. But in a surprise change of stance in March, the bank cut interest rates by 50 basis points for the first time since November 2015.
It subsequently kept rates on hold at 13.5% last month. ($1 = 305.85 naira) (Reporting by Chijioke Ohuocha, editing by Deepa Babington and Jane Merriman)