Firms Raise N384.45bn Through Commercial Papers As Yields Hit 24% In 8 Months

Nigerian companies raised N384.45 billion through commercial papers between January and August 2026, as attractive yields of up to 24 per cent and the need for faster access to short-term funding drove increased market activity.

The funds were raised by 16 companies across the agriculture, manufacturing and financial services sectors, highlighting the growing use of the short-term debt market as an alternative to conventional bank borrowing.

Commercial paper rates currently range between 20 per cent and 24 per cent per annum for short-term tenors of 90 to 270 days, depending on the issuer’s credit rating, sector, and prevailing market liquidity.

LEADERSHIP reports that commercial paper is a short-term, unsecured debt instrument issued by creditworthy companies to raise funds directly from investors. They typically have maturities of 30 to 270 days and are mainly used to finance working capital, inventory, and other immediate business obligations.

Unlike bank loans, commercial papers are not backed by collateral. Instead, they rely largely on the issuing company’s reputation and creditworthiness and are structured as short-term debt instruments.

Leading the market was Sunbeth Global Concepts Limited, which raised N150.41 billion in March through a multi-series commercial paper issuance. The agricultural commodities company issued three series valued at N25.10 billion, N41.54 billion and N83.77 billion under its N200 billion commercial paper programme.

Dangote Cement followed with N119.87 billion listed on FMDQ, while Ojaja Pan Africa raised about N25.53 billion through three commercial paper series.

Other major issuers included C&I Leasing, which raised N18.90 billion; MeCure Industries, N14.59 billion; and HillCrest, N11.73 billion.

Daraju Industries raised N10.08 billion through its Series 3 commercial paper issued in March, while SKLD Integrated Services accessed N7.30 billion, and Sycamore Integrated Solutions raised N6.89 billion.

TeleAfrica Communications raised N3.31 billion across three tranches, while ARCO and First Upland Ventures accessed N2.81 billion and N2.09 billion respectively.

Market analysts said the spread of commercial paper issuance across sectors reflects the growing acceptance of the instrument as a mainstream source of corporate funding, particularly as businesses seek alternatives to bank loans amid tight monetary conditions.

The Managing Director/Chief Executive Officer of APT Securities and Funds Limited, Mallam Kasim Kurfi, said the growing preference for commercial papers reflects companies’ search for cheaper and faster sources of short-term financing.

According to him, commercial paper provides companies with a cost-effective alternative to bank borrowing, particularly when funds are needed to finance working capital and other immediate obligations.

The Vice President of Highcap Securities Limited, Mr. David Adnori, said the market had grown rapidly because companies could raise short-term funds without some of the lending restrictions imposed by banks.

“They are structured to resemble short-term bonds rather than bank loans, and are typically unsecured. That is, they are not backed by any fixed charge on the issuing company’s assets. Instead, they are issued based on the reputation and creditworthiness of the issuer,” Adnori explained.

He added that unlike bank loans, which are subject to exposure limits to individual borrowers, commercial papers give companies greater flexibility in raising funds.

“Unlike bank loans that have exposure limits to a single borrower, CPs allow companies to raise virtually any amount they need. This flexibility is why many highly capitalised firms now use CPs as a key funding channel,” he said.

Adnori said the market had recorded encouraging activity so far in 2026, predicting further issuances before the end of the year.

“So far this year, issuance has been encouraging. We are only in the third quarter, but we expect to see even more CPs hit the money market before year-end,” he stated.

For investors, Adnori said the commercial paper market had become increasingly attractive because of rising yields, with selected instruments trading at yields ranging from about 22 per cent to nearly 24 per cent as of August 24, 2026.

He said the elevated yields reflect the prevailing interest-rate environment and the cost of short-term corporate funding, adding that commercial papers also offer investors an opportunity to diversify their portfolios without committing funds for long periods.

However, Adnori cautioned investors to pay close attention to the credit quality and listing status of issuers before investing.

“The key consideration for investors is listing and rating,” he said, noting that commercial papers listed on the Nigerian Exchange are required to have at least two credit ratings with a minimum rating of BB+.

He said the requirement provides investors with an additional level of assurance on the quality and creditworthiness of listed issuers.

With companies continuing to seek alternative sources of funding amid tight monetary conditions, analysts expect commercial paper issuance to remain strong through the rest of 2026.

The sustained demand for short-term corporate funding, combined with attractive returns for investors, is expected to keep the commercial paper market active in the coming months.