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What MTN’s CP Debut Means For Nigerian Banks

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By Emmanuel Aziken, Editor

MTN Nigeria Communications (MTNN) may have broadened its sources of short-term capital after making a double success of raising N100 billion through commercial papers.

Nigeria’s leading telecommunication giant raised two tranches of commercial papers with institutional investors including pension fund administrators, asset managers as its main pick-ups.

The information on the successful fund raise was made available to the Nigerian Stock Exchange in a notice issued by company secretary, Uto Ukpanah.

The company said that while the first tranche of Series I 180 day CP was priced at an effective yield of 4.90 % for a N20 billion size, the second CP sized at N80 billion for the 270 day Series II was priced at an effective yield of 5.95%.

“We initially set out to issue up to N50 billion under the N100 billion programme but, at the conclusion of the bank book build, the CP issuance was 400 per cent subscribed.

“Given the significantly over-subscribed book, MTNN opted to issue up to the N100 billion limit of the registered CP programme,” it said.

While noting the interest of corporate on its commercial paper programme, the company said:

“The level of interest in MTNN’s debut in the Nigerian debt markets is a strong reflection of investor confidence in its ability to continue to deliver on its strategic objectives,” the statement added.

The CP programme by MTN it was said was the largest debut CP issuance by a Nigerian corporate entity.

The statement to the Stock Exchange quoted MTN’s CEO, Mr. Ferdinand Moolman as saying that the successful programme has enabled the company to broaden its funding programme.

“It allows to broaden our sources of funding and combines established lines of credit with access to capital market funding, which will lower our overall cost of borrowing.

“The proceeds from the issuance will be applied towards MTNN’s working capital and general corporate purposes.

“The Series I & II notes will be listed on the FMDQ Securities Exchange,” Moolman was quoted as saying.

The effect of the CP programme and the confidence of the company in the programme could in the future alter the market dynamics especially for the banks which had in the past been the main provider of short term capital for the company.

Other fund seekers in the real sector could also follow the MTN channel and in due course limit the room for the banks to play with their short term funds.

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