MTN Nigeria Communications PLC (MTN Nigeria) has successfully raised N125 billion through the issuance of Series 6 and 7 commercial paper notes. This significant move is part of the telecom giant’s ongoing strategy to diversify its financing options and reduce its average cost of debt. The company disclosed this development in an official statement signed by its Company Secretary, Uto Ukpanah, and addressed to the Nigeria Exchange Limited.
Driving Financial Diversification
The issuance of these commercial paper notes underscores MTN Nigeria’s commitment to broadening its funding sources, a key element in maintaining financial stability and flexibility. By tapping into the commercial paper market, MTN Nigeria aims to secure short-term working capital while optimizing its financial structure.
The commercial paper issuance, conducted under its upsized N250 billion Commercial Paper Issuance Programme (CP Issuance), sought to raise N100 billion. Remarkably, the offering achieved a remarkable 146% subscription rate, resulting in the issuance of N125 billion across both series. This accomplishment sets a new benchmark, marking the largest aggregate CP issuance within a calendar year by any corporate entity in Nigeria’s debt capital markets.
MTN Nigeria’s commercial paper offering included a 181-day commercial paper note with a yield of 13.00% and a 265-day commercial paper note yielding 13.50%. These competitive yields attracted strong investor interest and participation.
Karl Toriola, the CEO of MTN Nigeria, expressed satisfaction with the overwhelming support received from the investor community. He highlighted that the 146% subscription rate reflects MTN Nigeria’s robust financial capacity, the strength of its brand, and its leadership position in the industry.
Commercial Paper: A Financial Instrument
Commercial paper is a short-term, unsecured debt obligation typically issued by financial institutions and large corporations. It serves as a cost-effective alternative to more expensive methods of raising funds. These money market instruments typically have maturities of up to 270 days and are utilized by corporations facing short-term financial needs, such as covering operational expenses.
MTN Nigeria’s successful commercial paper issuance signifies its continued financial prowess and underscores its commitment to exploring diverse avenues for financial stability and growth.
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