MTN Nigeria has unveiled its intentions to issue N100 billion in commercial paper notes as part of its Commercial Paper Issuance Programme.
The company’s recent announcement, which was filed on the Nigerian Exchange Limited, outlines its strategy to diversify financing options and allocate the funds towards short-term working capital and other funding needs.
The commercial paper notes being offered are categorized as series 6 and 7 within the issuance programme.
In a previous instance in June 2020, MTN successfully raised N100 billion through its debut commercial paper issuance, which was oversubscribed by 400 percent.
A growing number of companies are utilizing commercial papers to secure short-term funds amid rising fund costs.
As of the end of the first quarter of 2023, quoted commercial paper values on the FMDQ Exchange totaled N539.22 billion.
Monthly reports from the FMDQ Exchange indicate a consistent increase in the quotation of commercial papers since the start of the year.
Commenting on this trend, Johnson Chukwu, the CEO of Cowry Asset Management Limited, emphasized that the prevailing high-interest rate environment has led companies to seek funding from the money market and opt for issuing commercial papers over borrowing long-term debts.
Chukwu further highlighted that commercial papers offer a means to reduce borrowing costs from banks.
In response to inflation concerns, the Central Bank of Nigeria has escalated its interest rate to 18.75 percent, marking the fourth consecutive rate hike in 2023.
Meanwhile, the National Bureau of Statistics reported a rise in the inflation rate to 24.08 percent in July, up from 22.79 percent in June.
