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By Chinwendu Obienyi
With the slow pace of initial public offering and share sale in the capital market, security listings on Nigeria’s stock exchange has continued to dwindle. But the growing need of companies for short term capital to stay afloat due to the weak macro-economy, has made Commercial Papers (CPs) issuances a fast rising option in the primary market space.
Daily Sun investigations reveal that the value of CP issuances in recent times has risen to N128.25 billion thus far in 2022 with at least 21 companies raising about N111.34 billion. Data obtained from FMDQ Exchange revealed that five companies quoted in January raised CP worth N5.52 billion and 14 in February quoted a total value of CPs worth N97.82 billion, while 3 companies quoted in March have so far raised N8 billion.
This means that these companies have raised N111.34 billion. Among these companies are BUA Cement, Dangote Cement, Mixta Real Estate, Mecure Industries, Babban Gona Farmer Services Limited, Providus Bank and Nova Merchant Bank.
Others include DLM Capital, Coronation Merchant Bank, DLM Capital, Skymark Partners Limited, FBNQuest, NECIT Nigeria and United Capital.
The FMDQ Securities Exchange Limited, in a statement, as at last week, said it has admitted over 21 commercial paper (CPs) adding that an active CP market provides companies with the opportunity to raise capital to meet their short-term funding obligations.
CPs are short-term debt financing securities (no longer than 270 days in tenor) consisting of unsecured and discounted promissory notes issued by large corporations with good credit ratings, which can be readily traded.
According to the exchange, the admission of these CPs validates its conscious drive to support the capital market needs of corporates and governments and to further deepen the Nigerian financial markets, and ultimately, the nation’s economy.
“In keeping with its commitment to develop the DCM, FMDQ Exchange shall sustain its efforts in supporting issuers with tailored financing options to enable them achieve their strategic objectives, deepen and effectively position the Nigerian DCM for growth.
In line with its strategic objectives to support institutional growth and deliver prosperity to Nigerians, FMDQ Exchange will continue to demonstrate its commitment towards delivering a globally competitive, operationally excellent, liquid and diverse (GOLD) standard to the Nigerian DCM through the promotion and provision of a world-class quotation service, availing issuers and investors the much-needed global visibility, confidence and protection in the markets”, it said.
