As public offerings seem to be out of fashion following investors attitude towards the equities market, firms have found refuge in Commercial Papers (CPs).
In the last nine months, companies operating in several sectors of the Nigerian economy raised a whopping sum of N576.29billion via CPs with many more embracing the short-term debt financing security.
According to FMQE Exchange Limited report for the month of September, firms raised N22.40billion CP last month as against N29.05billion CPs raised in August 2022.
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.
Union Bank of Nigeria, Julius Berger, Johnvents Industries Limited and Coleman Technical Industries were among the companies that accessed the CP market of the FMDQ.
FMDQ Exchange had in September approved the registration of the Union Bank N100 billion CP issuance programme, while Julius Berger announced N30 billion CP issuance programme.
In addition, Johnvents Industries Limited issued N30billion CP as Coleman Technical Industries quoted an additional N2.51 billion in CP.
According to FMDQ Exchange report, the outstanding value of admitted CPs in nine months of 2022 stood at N3.51trillion.
The report noted that total value of CPs quoted on FMDQ Exchange in September 2022 was N22.40billionn, representing a month-on-moth (MoM) decrease of 22.91per cent or N6.66boillion) from the value of CPs quoted in August 2022.
“Quoted CPs were issued by institutions from various sectors including two from financial services, four from the Agriculture sector, one from Real Estate and two from the Manufacturing, “FMDQ said.
The report added that, In September 2022, CPs with a total value of N29.56billion matured and were redeemed resulting in a MoM decrease of CPs outstanding by 1.45per cent (N7.16billion) to N487.73billion.
“On the market turnover by products, the month of September 2022 recorded N19.86 trillion, representing a Month-on-Month (MoM) increase of 27.87per cent or (N4.33trillion) and a year-on-year (YoY) decrease of 17.35per cent or N4.17trillion from August 2022 and September 2021 figures respectively.
“Foreign Exchange (FX), Money Market (MM) and CBN Bills transactions dominated secondary market activity in September 2022, accounting for 84.99 per cent of the total secondary market turnover,” the report added.
The report disclosed that total spot market turnover for all products traded in the secondary market was N16.22trillion in September 2022, representing a MoM increase of 20.50per cent or N2.76trillion from August 2022.
According to the report, “The MoM increase in total spot market turnover was driven by an uptick in turnover across all products, especially FX turnover which increased MoM by 42.62per cent or N1.07trillion), likewise Fixed Income and Money Market turnover in September 2022 increased by 16.94per cent (N1.13trillion and 13.15 per cent or N0.57trillion, respectively.
“The increase in MM turnover was solely driven by an Increase in Repos/Buy-Backs, offsetting the slump in Unsecured Placements/Takings. Similarly, the uptick in Fixed Income turnover was jointly driven by MoM increases in all Fixed Income products with the exception of CBN Special Bills.”
The report added that the Debt Management Office (DMO) sold T-bills valued at N553.66billion across its auctions in September 2022, representing a 24.10per cent or N107.51billion MoM increase on the value of T-bills sold across its N446.15billion auctions in August 2022.
The report explained that the DMO sold two 10-year and one 20-year FGN Bonds worth N261.50billion via re-openings in September 2022 (exceeding the total amount of FGN Bonds offered by (N36.50billion).