United Nigeria Airlines has raised N22 billion from Nigeria’s capital market through its debut commercial paper (CP) issuance, becoming the first airline in the country to access the short-term debt market through the instrument.

The issuance, which was the first tranche of the airline’s N100 billion commercial paper programme, exceeded its initial N20 billion target following strong demand from investors.

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The airline said the offer was oversubscribed, reflecting investor confidence in its financial performance, business model, growth strategy and credit profile.

In recognition of the strong response, United Nigeria Airlines absorbed 10 per cent of the excess subscription, increasing the amount raised to N22 billion, while the remaining excess applications were refunded to subscribers who could not be fully allocated.

Speaking on the development, the Managing Director of United Nigeria Airlines, Mazi Osita Okonkwo, said the level of demand demonstrated the confidence investors had in the airline’s operations and expansion plans.

He said the proceeds would support the airline’s fleet expansion and operational requirements.

“The level of demand we received is a clear endorsement of our business model, and financial performance as well as the confidence the market has in our growth plans. The proceeds will support fleet expansion and operations.

“We are grateful to the investors who participated and we look forward to more active engagement with investors as we continue with our CP and other capital market programmes,” Okonkwo said.

The issuance was structured in two series, with tenors of 270 days and 364 days.

It also secured investment-grade credit ratings from two rating agencies. Agusto & Co. assigned short-term and long-term ratings of A3 and BBB- respectively, with a stable outlook, while DataPro assigned A1 and BBB ratings for the short-term and long-term instruments respectively.

The Managing Director of Meristem Capital Limited, Rasaki Salawu, which served as the lead issuing house, said the successful debut issuance marked a milestone for the airline and Nigeria’s aviation industry.

He said the N20 billion Series 1 and 2 issuance attracted strong demand from a broad range of investors, including asset managers, insurance companies and high-net-worth individuals.

Salawu said the airline elected to increase the amount raised by 10 per cent to N22 billion despite excess demand of more than N5 billion, describing the decision as a demonstration of financial discipline.

“We are proud to have served as Lead Issuing House for the registration of United Nigeria Airlines Limited’s N100 billion Commercial Paper Programme and the successful debut issuance of N20 billion under Series 1 and 2, which will support the company’s working capital needs.

“This is the first commercial paper issuance by an airline in Nigeria. It drew strong demand from a broad range of investors, including asset managers, insurance companies and high-net-worth individuals, reflecting the market’s confidence in the issuer.

“The issuance was oversubscribed, and the issuer chose to upsize by no more than 10 per cent, to N22 billion, despite excess demand of more than N5 billion. This discipline reflects the company’s financial prudence,” he said.

He added that Meristem Capital partnered with Cordros Capital and other dealers to execute the transaction.

United Nigeria Airlines currently operates flights to 14 destinations across Nigeria and Ghana and is finalising plans to expand its regional network.

The airline also has approvals to operate as a flag carrier to six international destinations.