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Nigeria’s FCMB to raise N30 Bln in 260-day C/Paper to support funding needs

By on December 11, 2020 0 115 Views

By Oludare Mayowa

Nigeria’s First City Monument Bank (FCMB) on Friday said it plans to raise N30 billion in Commercial Paper with 260-day tenor to support its short-term funding needs.

According to a regulatory filing by the lender’s holding company, FCMB Group Plc, the debt issuance is being undertaken under its N100 billion commercial paper programme.

“FCMB Group Plc (“FCMB”) hereby notifies the Nigerian Stock Exchange (“NSE”) and its esteemed
shareholders that one of its subsidiaries, First City Monument Bank Limited (the Bank) is
undertaking a Commercial Paper Issuance (“CP”) under its N100 billion-naira CP programme.

“The CP has a tenor of 260 days with the aim of raising up to N30 billion to support the Bank’s short-term funding needs.

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“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.

The local unit of Heineken, Nigerian Breweries, Dangote Cement Plc, MTN Nigeria and United Capital and many other corporations have explored the Commercial Paper channel to raise money for working capital and pay off existing debt.

Yields on fixed income assets and other money market have crashed to below 5 percent in recent time as the Nigerian banking industry battled with surging liquidity and the Central Bank of Nigeria (CBN) slashed returns on government securities.

Yields on 1-year Treasury Bill traded around 3.05 percent at the last primary market auction while the 3-month and 6-month paper traded below 1.0 percent at the auction.

Analysts said Commercial Paper might be priced higher than Government securities as high networth investors seek better returns on their money.

No date has been announced for the sales of the Commercial Paper by the lender.

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