The total value of Commercial Papers (CPs) quoted on FMDQ Exchange in November 2023 was N77.40 billion.
This represented a month-on-month (MoM) increase of 112.00 per cent from the value of N36.51 billion CPs quoted in October 2023. Quoted CPs were issued by institutions from various sectors including eight Financial Services, four Manufacturing, four Agriculture, four Real Estate, and two Health & Pharmaceuticals firms.
As a result, the total outstanding value for CPs increased MoM by 8.16 per cent from N77.40 billion to N1.026 trillion in November 2023.
Access to capital remains a top priority for corporates, as capital is required to meet short-term debt obligation such as working capital needs, funding expansion aspirations and existing debt obligations. The Commercial Paper market satisfies this requirement by providing competitive and timely access to capital, thereby helping corporates diversify their funding sources.
FMDQ Securities Exchange Limited provides access to capital for corporate Institutions through its efficient and proficient Securities Admission Franchise.
Commercial papers are a popular form of short-term debt security. They are short-term promissory notes, usually unsecured, and a with maturity period of under a year, generally not exceeding 270 days. They are issued by credit worthy companies to meet their short-term obligations. Being short term debt securities, they are regularly traded on the money markets as money market instruments.
In November, Bigoz Logistics Limited raised up to N3.0 billion 164 days Series 2 Tranche C under its N20 billion Commercial Paper Programme to finance its working capital requirements, as well as the execution of other business development initiatives.
MTN Nigeria Communications Plc raised Series 10 Commercial Paper offer of up to N72.104 billion under its N250 billion Commercial Paper Programme. The proceeds from the Offer will be used to support MTN Nigeria’s working capital and general corporate purposes.
Skymark Partners Limited also raised up to N5 billion Series 17, 18 and 19 Commercial Paper (CP) Issuances, under its N10 billion CP Programme. Analysts attributed the issuance of short-term corporate debt to low cost of finance and short maturity period.
The vice president, Highcap securities Limited, Mr. David Adnori attributed the surge to the low yield environment in the treasury bills market, which enabled companies to access the market to raise funds through commercial papers.
He said, with lending rates soaring at an unprecedented level, companies in the country have been exploring creative ways to mobilise funds at affordable rates.
Managing director, FMDQ Exchange, Tumi Sekoni said that FMDQ Exchange’s quotation service has been tailored to provide, amongst others, a unique opportunity for Issuers to raise finance thereby meeting their short-term funding needs even as the Nigerian debt markets becomes aligned with international best practices and standards.
She highlighted that FMDQ Exchange will remain dedicated to advancing the growth of the Nigerian debt markets by leading and supporting market-driven initiatives and maintaining its position as the preferred platform for registration, listing, quotation, trading, and reporting of financial securities.