6 Listed Firms Access N240.05bn Short-term Funds For Operational Expansion 

Dangote Cement Plc and five others raised and listed a total amount of N240.05 billion via Commercial Papers (CPs) in five months.

Access to capital remains a top priority for corporations, as capital is required to meet short-term debt obligations 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 with a 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.

FMDQ Securities admitted the listing of Dangote Cement N90 billion CP under its N150.00 billion CP Programme on its platform. Nigerian Breweries list N67.26 billion CPs under its N100.00 billion CP Programme was admitted on the Exchange’s platform in February, while Hartleys Supermarket & Stores Limited raised and listed N0.62 billion Series 1 CP under its N5.00 billion CP issuance Programme on FMDQ Exchange.

Zedcrest Capital Limited N5.00 billion CP, Greenwich Merchant Bank N12.20 and Flour Mills Nigeria N64,97 billion listed on FMDQ Exchange.

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, Ms. Tumi Sekoni said, 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.

Speaking on the successful issuance of the CPs, the Group chief financial officer, Flour Mills of Nigeria, Mr. Anders Kristiansson, stated that, “this joint quotation is aimed at harnessing alternative funding sources to meet some of our working and other capital requirements as we seek to deepen strategic, growth-consolidating investments across our value chains and in enabling capabilities that would unlock greater value for our stakeholders.”

Also, Group managing director of Zedcrest Capital Group, Mr. Dayo Amzat stated that, “this Programme marks our entry into the capital market as an issuer and the proceeds will be deployed to implement Zedcrest Capital’s 2023 strategic goals of digitising its consumer finance business and expanding its securities dealing offerings beyond West Africa.

“We are proud to welcome top local investors from the Pensions, Asset Management and Insurance industries as strategic partners. We are humbled by the faith placed on us and we look forward to rewarding their trust through strong execution of our 2023 aspirations.”

A stockbroker with Calyxt Securities Limited, Tunde Oyediran, said stock market regulators could attract more issues to the market with incentives such as reduction in transaction cost, the introduction of tax cuts and eliminating bottlenecks around application processes.

He pointed out that raising funds for working capital through CP has become a faster and cheaper way for companies to get funding for their business when compared to the cost of raising such funds through the equities market.