By Chinwendu Obienyi

Afrinvest (West Africa) Limited has announced the launch of its N5 billion commercial paper notes as the Series 1 and Series 2 of its N25 billion commercial paper issuance programme.

According to the company, the Series 1 Commercial Paper notes will have a tenor of 180 days and a yield rate of 16.5 per cent. The Series 2 Commercial Paper notes have a tenor of 270 days and a yield rate of 18 per cent.

The company’s statement noted that there is a minimum subscription amount of N1 million, with multiples of N1000 thereafter and the offer for the Commercial Paper is expected to close on Wednesday, January 24, 2024.

Similarly, the Commercial Papers will be traded on the FMDQ Exchange. Afrinvest currently has a short-term rating of A3 from GCR Ratings and BBB- from Agusto & Co.

Owing to the growing reliance on debt instruments, the Nigerian corporate landscape experienced a significant shift in fund-raising strategies as 56 companies raised N1.5 trillion through commercial papers in 2023, data from the FMDQ revealed.

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This represented a 500 per cent increase from N251 billion raised by the companies in the corresponding year of 2022. The surge in CP issuances showed that companies resorted to commercial papers as well as corporate bonds due to the high lending rates from commercial banks.

Commercial papers, unsecured, short-term debt instruments issued by corporations and are typically used to finance short-term liabilities such as payroll, accounts payable, and inventories.

It has emerged as a beacon for both borrowers and investors seeking favourable terms and security.

For instance, MTN Nigeria Plc raised the highest amount, with N375 billion raked in 7 issuances, as part of its N250 billion commercial paper issuance program. Dangote followed, raising N221.28 billion in six issuances in the year under review, as part of its N300 billion commercial paper issuance program.

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