A total of N921.88 billion of Commercial Papers was quoted on the exchange in first half (H1) 2023, higher than N503.68 billion quoted in H1 2022, data from the FMDQ Exchange has shown.
A further breakdown of the data showed that the month of March recorded the highest issuance at N354.18 billion, followed closely by May at N184.01 billion, while January had the least at N83.20 billion.
Nigerian firms’ participation in the debt market improved in first half (H1) 2023 with the enormous issuance of Commercial Papers to escape the high lending rates in deposit money banks.
Proshare Intelligence noted that the hawkish monetary path made banks’ lending rate spiral since 2022. Prime lending and the maximum lending rate rose to 14.07 percent and 28.31 percent in May 2023.
June issuance dropped to N84.38 billion, the lowest since the rally in February. The issuances were from the financial services, manufacturing, commodities trading and real estate sectors.
Analysts believe investors’ attraction to high coupon rates due to elevated inflation has revived interest in riskier assets given the oversubscription for most issuances.
The numerous issuances should persist in H2 2023. However, subscriptions might dial down as investors weigh the harsh business environment on companies’ performance.
Henry Obiekea, Managing Director of FairMoney Nigeria, a financial technology company and credit-led digital bank, said his firm’s decision to issue N2.5 billion Commercial Paper in the first half of 2023 was a key strategy aimed at accessing local capital to drive business growth.
“The Commercial Paper and the first issuance are part of our underlying funding strategy to help drive the business. When we started this business about six years ago, one of the things that was critical and a key pillar for growth was to ensure that the business consistently has adequate capital and funding to grow,” Obiekea told BusinessDay.
Apart from FairMoney, Fast Credit also announced the successful completion of its N3 billion Commercial Paper series 1, 2 and 3 issuance in the first half of 2023.
“This was the first attempt of the company to raise funds from the capital market and its over subscription was a clear reaffirmation of the confidence of our investors and stakeholders in the unique value we are creating in the financial industry,” Emeka Iloelunachi, CEO of Fast Credit said.
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