Nigerian companies raise N1.5 trillion from commercial papers in 2023

In a bid to avoid the high-interest environment which has seen banks lending at 30 percent per annum, 56 Nigerian companies raised N1.504 trillion through commercial papers in 2023, representing a whopping 499% increase from the N251 billion raised in 2022.

With the Central Bank of Nigeria tightening monetary policy, which has seen rate hike touch 18.75%, and inflation reach 27 percent, companies have resorted to debt instruments such as commercial papers to raise funds.

Commercial papers have emerged as a beacon for both borrowers and investors seeking favourable terms and security because they often spot interest rates lower than those offered by traditional banks.

The CPs issued out by MTN Nigeria were issued between 10.41% and 14.33%, however, the lending rate to ICT companies as of December 15, 2023, ranged between 28.50% and 32.00% in UBA, and 22.00% and 28.50% in Access Bank.

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A data analysis of figures released by the FMDQ Group indicates that MTN Nigeria Plc raised the highest amount, with N375 billion raised in 7 issuances, as part of its N250.00 billion commercial paper issuance program.

They were followed by Dangote Cement which raised N221.28 billion in six issuances in 2023, as part of its N300.00 billion commercial paper issuance program.

Other notable amounts raised through commercial papers in 2023 include N150.97 billion raised by Flour Mills of Nigeria Plc through its N200.00 billion commercial paper issuance program and N116.49 billion raised by Nigerian Breweries Plc as part of its N100.00 billion commercial paper issuance.

Completing the list of the top ten CP issuers for 2023 were Sterling Bank with N47.86 billion raised, Dufil Prima Foods Plc with N47.19 billion, FSDH Merchant Bank with N46.08 billion, Julius Berger Nigeria with N30.00 billion, FBNQuest Merchant Bank with N29.42 billion, and Mixta Real Estate with N28.94 billion.