Borrowers pay up to 20% in H1 bond issues

Corporate borrowers and government-backed issuers paid coupon rates of up to 20 per cent to raise long-term funds from Nigeria’s debt capital market in the first half of 2026, reflecting the elevated cost of borrowing amid high interest rates and persistent inflation.

A review of bond listings on the FMDQ Securities Exchange and the Nigerian Exchange (NGX) showed that issuers across the banking, power, infrastructure, manufacturing, housing and real estate sectors raised hundreds of billions of naira to refinance debt, fund expansion projects, strengthen liquidity and finance infrastructure development.

Coupon rates on fresh bond issuances ranged from 15.50 per cent to 20.00 per cent, significantly higher than rates on older bonds issued during periods of lower interest rates, highlighting the premium borrowers now pay to attract long-term capital.

The largest transaction during the period was NBET Finance Company Plc’s N501.02 billion bond issuance at 17.50 per cent, with proceeds earmarked to address liquidity challenges in Nigeria’s electricity market.

The Lagos State Government followed with a combined N244.82 billion raised through a N230 billion 10-year bond priced at 16.25 per cent and a N14.82 billion five-year Green Bond at 16.00 per cent to finance infrastructure and environmentally sustainable projects.

In the banking sector, Access Bank Plc issued a N193.83 billion Series 3 Senior Unsecured Bond at 15.50 per cent, while UAC of Nigeria Plc raised N54.03 billion through a seven-year bond priced at 17.35 per cent to refinance existing obligations and support capital expenditure following its acquisition of CHI Limited.

Veritasi Homes & Properties Plc recorded the highest coupon among major bond issuers, offering 20.00 per cent on its N10 billion three-year debut bond to fund residential housing projects.

In the short-term debt market, Sunbeth Global Concepts Limited raised N150.41 billion through multiple commercial paper issuances, offering implied yields of between 21.00 per cent and 23.50 per cent, reflecting strong investor demand for higher-yielding short-term instruments.

Other commercial paper issuers included Daraju Industries Limited, TeleAfrica Communications Limited, Accion Microfinance Bank Limited, SKLD Integrated Services Limited, Sycamore Integrated Solutions Limited and Miskay Boutique International Limited, each raising funds primarily for working capital and general corporate purposes.

For investors, several previously issued corporate bonds remain actively traded on the FMDQ and NGX, including Access Bank’s 15.50 per cent bond, MTN Nigeria’s 13.00 per cent bond, Dangote Cement’s 12.50 per cent and 13.50 per cent bonds, AXA Mansard’s 14.30 per cent bond, and Interswitch Africa’s 15.00 per cent bond.

Analysts said the wide spread in coupon rates, from 12.50 per cent on older investment-grade issues to 20.00 per cent on newer corporate offerings, reflects differences in credit quality, issuer profile, sector risks and prevailing market conditions.

Despite elevated borrowing costs, the strong volume of bond issuances in the first half of the year underscores sustained appetite among corporate and public sector issuers to tap Nigeria’s debt capital market to finance growth, refinance obligations and support long-term investment programmes.