LAPO Microfinance Bank launches N10 billion 5-year Bond: Key Takeaways for Investors

LAPO Microfinance Bank has announced the launch of its N10 billion 5-year fixed-rate senior unsecured bond under the N30 billion Debt Issuance Programme.

This issuance marks a significant milestone for LAPO MFB in its strategic use of the domestic capital markets to fund its expansion and growth plans.

The offer, which opened on March 23, 2026, is scheduled to close on April 1, 2026, and the coupon will be paid semi-annually, with the principal due at maturity.

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**What the Offer Circular Says **

• Issuer: LAPO MFB SPV Plc
• Series: Series 1 Bond
• Tenor: 5 years
• Price Range: 19.00% – 20.00% p.a. (finalized post-book build)
• Redemption: Bullet repayment; principal to be repaid at maturity
• Coupon: Fixed rate, semi-annual payments
• Issue Rating: BBB- (Agusto & Co.) / BBB- (GCR)
• Minimum Subscription: N20,000,000 (20,000 units at N1,000/unit), multiples of N1,000 thereafter
• Use of Proceeds: To support LAPO MFB’s financial inclusion initiatives, particularly expanding access to financial services for small businesses and underserved communities in Nigeria.

**About LAPO Microfinance Bank **

LAPO Microfinance Bank is one of Nigeria’s microfinance institutions, offering financial services for low-income and underserved populations.

The bank started operations in 1987 and now operates across 34 states and the Federal Capital Territory (FCT).

It provides tailored financial solutions for micro, small, and medium enterprises (MSMEs) and low-income households.

**What you need to know  **

LAPO Funding SPV Plc, acting as the issuer of the N10 billion 5-year fixed-rate senior unsecured bond, is leveraging the bond to support its financial inclusion initiatives.

This issuance falls under its N30 billion Debt Issuance Programme, marking the next step in the bank’s strategic expansion into the Nigerian capital markets.

This bond is expected to pay an interest rate between 19.00% and 20.00% per year, but the exact rate is not fixed yet. It will depend on how investors bid during the book building process.

• The coupon rate is not fixed until after the bond issuer receives investor bids during the book building process.
• The coupon rate will be finalized based on the demand and pricing from investors, with the final rate falling between 19.00% and 20.00% per annum.

However, for the sake of estimation, if we assume an average coupon rate of 19.50%, and considering a minimum investment of N20 million (which corresponds to 20,000 units of the bond, priced at N1,000 per unit), the bond will pay an annual interest of N3.9 million.

This annual interest will be split into two equal payments (since the coupon is paid semi-annually).

**Investment case **

The N10 billion bond issuance by LAPO Funding SPV Plc appears to be a good investment opportunity, especially when considering the bank’s solid financial track record and growth trajectory.

**Let’s break it down **

With a coupon rate of 19.00% – 20.00%, the bond provides higher yields compared to FGN similar tenor bond (which currently offers around 16% for a similar tenor).

• This means that the LAPO bond’s higher coupon rates (19.00% – 20.00%) provide compensation for both higher credit risk (relative to the FGN bond) and expected inflation over the bond’s life.

From a financial perspective, LAPO Microfinance Bank has demonstrated robust performance over the past five years.

• Over the past five years, profit after tax grew at a compounded annual rate of 25.48%.  In 2025, profit after tax reached N9.146 billion; 32% higher than the 2024 profit.
• The bottom-line performance is supported by its strong net interest income due to its lending operations, while interest expenses have been carefully managed, ensuring that the bank remains profitable even in the face of high market competition.

Net interest income reached N59.456 billion; 30% higher than 2024 N46 billion. The growth has been consistent, from N30.5 billion in 2021 to 2025 numbers.

• The growth is supported by strong lending operations, as LAPO continues to expand its loan book. The loan portfolio rose from N75 billion in 2021 to N118 billion in 2025.

Also, LAPO has shown consistent growth in its balance sheet, with total assets reaching N143 billion and an equity base of N42 billion by 2025.

• The bank has kept its capitalization strong, with a capital adequacy ratio of 29%, far exceeding the regulatory minimum, which reflects sound capital management and provides a cushion for unforeseen challenges.

The bond is rated BBB- by both Agusto & Co. and Global Credit Rating Company (GCR), reflecting LAPO’s established position in Nigeria’s microfinance sector and its solid financial foundation.

The bank’s previous bond issuances (N3.15 billion in 2017 and N6.2 billion in 2020, both fully repaid) add further confidence in its ability to meet obligations.

**Investor Takeaways **

• The LAPO MFB bond offers a high-risk, high-reward investment opportunity.

• Higher coupon rates (19.00% – 20.00%) are attractive compared to sovereign yields, but investors must be comfortable with the credit risk.

• The strong financial performance, healthy growth, and sound capital management make this bond an appealing option for investors seeking attractive yields.

Although LAPO has repaid its previous bond issuances, there is still the potential risk of default

If LAPO MFB defaults on interest payments or principal repayment, investors could face losses.

Also, if interest rates decline, investors may find themselves locked into the bond for the entire term, missing out on better opportunities elsewhere.

This lack of flexibility contrasts with bonds that offer greater investor protection through embedded options, like puttable bonds, which allow investors to exit early and mitigate the effects of adverse market conditions.