Nigeria’s FCMB halts N30 bln C/Paper sales after CBN hike yield on T/Bills
By Samuel Bankole
Nigeria’s First City Monument Bank (FCMB) on Monday said it has suspended its plans to issued N30 billion in Commercial Paper due to the distortion in market price discovery.
The FCMB Group, the holding company for the lender said in a filing with the Nigerian Stock Exchange (NSE) said “the proposed Commercial Paper Issuance (“CP”) by one of its subsidiaries, First City Monument Bank Limited (the “Bank”) has been suspended.”
According to the filing, the suspension was “as a result of the Nigerian Treasury Bills auction of Wednesday, 9 December 2020, which distorted price discovery.”
The lender had on Friday announced it plans to raise N30 billion in Commercial Paper with 260-day tenor to support its short-term funding needs.
“The CP serves as an additional funding source for the Bank,” the holding company said in the filing with the Nigerian Stock Exchange on Friday.
Commercial Paper has become a veritable source of financing for banks and other institutions since the beginning of the year as many businesses move to address their financial challenges in the face of the impact of the Coronavirus pandemic on their operations.
Last week, the Central Bank of Nigeria (CBN) offered and allotted Treasury bills worth N50.94 billion amidst huge subscription of N102.9 billion by investors.
The regulatory bank also hiked yields on the local debt to 3.2 percent for the 1-year paper compared with 0.15 percent at the previous auction, against market expectations of sustain low yield regime.
Insiders said FCMB had planned its Commercial Paper issuance on the premise that the yields on fixed-income assets will stay at below one percent, providing the lender the opportunity to tap into the low yield regime prevalent then in the market.