Debt, Markets

AB Microfinance Bank Seeks Up to ₦5 Billion in 5-Year Bond Offer as Assets Rise to ₦70.5 Billion

Microfinance lender turns to bond market after successful commercial paper issuances

Emmanuel Eze

AB MFB SPV Plc, the special purpose vehicle established by AB Microfinance Bank Nigeria Limited, has launched a Series 1 bond issuance of up to ₦5 billion under its ₦15 billion Bond Programme, marking the bank’s latest effort to diversify funding sources and support continued expansion in Nigeria’s retail and SME lending market.

The offer, which is being arranged through a book-building process, opened this week and is scheduled to close on June 25, 2026.

The five-year senior unsecured fixed-rate bond represents a significant step in the institution’s evolution from a microfinance lender reliant primarily on deposits and commercial paper financing into a regular participant in Nigeria’s domestic debt capital markets.

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The issuance carries an A- rating from DataPro and a BBB+ rating from Agusto & Co., reflecting what the rating agencies cited as the bank’s strong market position, growing profitability, solid capitalization and established track record in serving Nigeria’s micro and small business sectors.

Backed by International Development Finance Investors

Founded in 2008 and licensed by the Central Bank of Nigeria as a national microfinance bank, AB Microfinance Bank is backed by a consortium of international investors led by Access Microfinance Holding and the African Development Bank.

The institution occupies an important niche within Nigeria’s financial system, serving microenterprises, small businesses and retail borrowers that often struggle to access credit from conventional commercial banks.

Over the past decade, the bank has expanded its footprint to 36 branches nationwide while simultaneously investing in digital channels including mobile banking applications, USSD services and agent banking networks.

According to information provided to investors, the bank’s loan portfolio remains concentrated in productive sectors of the economy, with micro loans accounting for approximately 55 percent of outstanding lending and SME loans representing 44 percent.

Strong Financial Growth Supports Bond Issuance

The bond offer comes against the backdrop of a period of sustained growth in the bank’s earnings and balance sheet.

Interest income increased from ₦9.3 billion in 2021 to ₦25.7 billion in 2025, highlighting the rapid expansion of the bank’s lending operations. The momentum appears to have continued into 2026, with interest income reaching ₦7.5 billion during the first quarter alone.

Profitability has also strengthened considerably. Profit after tax rose from ₦1.51 billion in 2021 to ₦3.12 billion in 2025, while first-quarter 2026 profit reached ₦850 million.

The balance sheet tells a similar story of growth. Total assets expanded from ₦24.9 billion in 2021 to ₦58.1 billion by the end of 2025 before rising further to ₦70.5 billion in the first quarter of 2026.

Shareholders’ funds have nearly doubled over the same period, increasing from ₦5.8 billion in 2021 to ₦11.5 billion as of March 2026.

For investors evaluating the bond offer, these figures suggest a financial institution that has managed to scale operations while maintaining profitability and strengthening its capital base.

Building a Capital Markets Funding Platform

The current bond issuance follows a series of successful commercial paper transactions undertaken by the bank in recent years.

In 2023, AB Microfinance Bank established a ₦9 billion Commercial Paper Programme and subsequently completed several issuances under the programme. One of the most notable transactions was the ₦4.23 billion Series 5 issuance in November 2024, which was oversubscribed.

According to the bank, all commercial paper obligations issued under the programme were repaid in full at maturity.

That repayment history is likely to be a key consideration for institutional investors participating in the bond book build, particularly in a market where credit quality and issuer discipline have become increasingly important differentiators.

The transition from short-term commercial paper funding to longer-dated bond financing also reflects a broader trend among Nigerian financial institutions seeking to better match the maturity profile of their liabilities with longer-term lending activities.

A Bet on Financial Inclusion

Beyond the transaction itself, the bond issuance highlights the growing role of microfinance institutions in Nigeria’s financial ecosystem.

While commercial banks continue to dominate the country’s financial sector, microfinance banks remain central to extending credit to small businesses, traders and entrepreneurs who form the backbone of Nigeria’s informal and SME economy.

For AB Microfinance Bank, access to longer-term capital could support continued expansion of lending activities at a time when many small businesses face elevated borrowing costs and constrained access to financing.

As Nigeria seeks to improve financial inclusion and deepen credit penetration, institutions capable of combining development-focused lending with commercial sustainability are likely to attract increasing attention from both investors and policymakers.

The success of the Series 1 bond offer may therefore serve as a broader test of investor appetite for exposure to one of Nigeria’s fastest-growing segments of the financial services industry.