MTN Nigeria issues N125bn commercial papers at record yields

MTN Nigeria Communications Plc is spending more to source short-term funds it needs to uplift working capital by way of commercial papers, the company said in a disclosure on Monday.

Attracting interest to its commercial papers issued on 1 March implied yields were priced at levels never before seen to compensate investors for the impact of inflation on return on such securities.

“MTN Nigeria issued 188-day commercial papers at a yield of 11.00% and 267-day commercial paper of 12.50%,” the firm said in a Monday note to the Nigerian Exchange.

The development mirrors a worsening borrowing ordeal in corporate Nigeria, where the central bank’s move to curb inflation has pushed lending rates to their peak level in 17 years.

The company had two commercial papers of similar maturities issued last April. The first having a tenor of 184 days was priced at 7.5 per cent while the second running for 254 days carried an 8.5 per cent yield.

The Central Bank of Nigeria has hiked the monetary rate five times in a trot now, summing up to 600 basis points and forcing corporates to pay more to service new debts.

MTN Nigeria, the country’s biggest public company by revenue, raised N125 billion from the latest issuance, initially planning to source N100 billion, according to a notification to the Nigerian Exchange dated 6 March, 2023.

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Its maiden issuance of commercial paper occurred in June 2020 when it raised N100 billion, the issuance being 400 per cent subscribed.

Last June, rating agency GCR affirmed the short-term issuer ratings of A1+(NG) for MTN Nigeria, meaning the telecom operator has the “highest certainty of timely payment of short term obligations relative to other issuers or obligations in the same country.”

The company’s earnings before interest, tax, depreciation and amortisation for 2022, a fundamental metric for gauging creditworthiness, climbed 22 per cent to N1.1 trillion.