UPDATE 1-Nigeria's Access, Union Bank tap local bond market as yields fall

(Adds details, background)
By Chijioke Ohuocha
LAGOS, Aug 5 (Reuters) - Nigeria's Access Bank ACCESS.LG
and Union Bank UBN.LG 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 FIDELIT.LG 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.
= 305.85 naira)