MTN Nigeria’s Financial Maneuvers: Raises N125 Billion via Series 6&7 Commercial Paper Notes for Diversification
MTN Nigeria has successfully raised a substantial sum of N125 billion through its Series 6 and 7 commercial paper notes. This strategic move is part of MTN’s ongoing efforts to diversify its financing options, as officially revealed in a statement signed by the Company Secretary, Uto Ukpanah, to the Nigeria Exchange Limited.
As stated in the announcement, the issuance of these commercial paper notes aligns with MTN’s overarching strategy to broaden its funding sources while simultaneously reducing its average debt costs. The company’s intention is to apply the proceeds from this issuance to fulfill its short-term working capital requirements.
The statement highlights the achievement of MTN Nigeria Communications PLC, noting that the company aimed to raise N100 billion but received overwhelming demand, resulting in a remarkable 146% subscription rate. Consequently, a total of N125 billion was issued across both series, marking a significant milestone as the largest aggregate commercial paper issuance by any corporate entity in Nigeria’s debt capital markets within a calendar year.
To provide more specific details, MTN Nigeria issued a 181-day commercial paper at a yield of 13.00% and a 265-day commercial paper at a yield of 13.50%, with an issue date of 23 August 2023. Karl Toriola, the CEO of MTN Nigeria, expressed satisfaction with the immense support received from the investor community, underscoring the company’s robust financial capacity, its strong brand reputation, and its leading position in the industry.
Insights:
Commercial paper serves as a short-term, unsecured debt instrument frequently employed by financial institutions and large corporations as an economical means of raising funds. Typically, it carries a maturity period of up to 270 days. Corporations often turn to commercial paper when faced with short-term financial obligations that require prompt attention.