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As of January 10, 2024, Nigerian companies have collectively issued around N90.01 billion in commercial papers, based on data provided by FMDQ Group and monitored by Nairametrics.
The prominent issuers in this period include Dangote Cement, Rand Merchant Bank, Bigoz Logistics Limited, SKLD Integrated Services Limited, Robust International Limited, and FastCredit.
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In the preceding year of 2023, Nigerian companies actively utilized the commercial paper market, issuing approximately N1.5 trillion in total.
This underlines the growing significance of the debt market as a primary avenue for capital mobilization within Nigerian corporates.
Notably, major contributors to this figure were MTN Nigeria, Dangote Cement, and Flour Mills of Nigeria, accounting for 49.7% of the total paper issuances. The specific amounts issued by these companies were N375 billion, N221.78 billion, and N150.97 billion, respectively.
Dangote Cement stands out for initiating a N150 billion commercial paper program in 2021, which was later expanded to N300 billion in July 2023. As of the latest data, the company has successfully issued around N281.79 billion under this expanded program.
These papers are gaining favor among Nigerian corporates as a cost-effective means of fundraising. The prevailing high interest rates set by banks, influenced by an unchanged Monetary Policy Rate (MPR) at 18.75% and a 32.5% cash reserve ratio, make bank loans less attractive for businesses.
Investors are increasingly drawn to these papers due to their ability to offer attractive returns within a short time frame, coupled with the perception of being relatively low risk.
