FBNQuest Merchant Bank, the investment banking and asset management group of FBN Holdings Plc, has recommended commercial papers (CPs) and bonds to corporate issuers seeking to raise working capital, expansion capital, refinance expensive debt and better match their cash obligations with revenues.
Speaking at the Leading Conversations with FBNQuest webinar series, Head Capital Markets, FBNQuest, Oluseun Olatidoye, noted that many companies do not take advantage of Nigeria’s growing CP and bond market to access stable funds that match their capital needs.
He said: “Even though interest rates have trended higher in the first quarter of this year, there is still significant scope for many companies to access cheaper and more stable funding from investors who are seeking well-run businesses with predictable cashflows to invest in.”
Nigeria’s capital market has recorded a flurry of corporate commercial papers and bond issues since a sharp decline in interest rates in the third quarter of 2020.
And Olatidoye said: “We think the market conditions have just cast the spotlight on a financing option that discerning companies should consider.
“We look forward to working with our clients to navigate the process to issuing CPs and bonds and therefore unlocking the efficiency and convenience that these instruments offer.”
The webinar with the theme: ‘Funding through Commercial Papers and Bonds’ was hosted to engage corporates and investors on the opportunities within issuing and investing in commercial papers and bonds.
Other speakers included Senior Executive Director at Valency International, a leading food ingredient supply chain company, Sumit Jain. He echoed the sentiment about the benefits of issuing commercial papers.
“We believe that corporates can lower the interest paid on bank debts by up to 4 percentage points by issuing commercial papers. Loans also offer other tremendous benefits in the current macroeconomic environment,” Jain said.
FBNQuest said it had advised on the issuance of several CPs transactions for organisations such as Valency Agro Nigeria Limited, Mixta Real Estate plc, Dangote Cement Plc, Nigerian Breweries plc (NB), Lafarge Africa plc, Flour Mills of Nigeria plc (FMN), Wema Bank plc, and UACN Property Development Company Plc (UPDC) among others.