Nigeria’s equities market gained 2.3 per cent last week on increased buying interest in some key stocks. To assess the performance of Nigeria’s equities market in an interview Kato Mukuru, Head of Frontier Research at EFG Hermes, said he got reliable information from a staff member of the Nigerian Stock Exchange (NSE), that MTN Nigeria plans 100 billion naira commercial paper
Possible reason: Mukuru made known that the telco might have resorted to raise the commercial paper because “it tells you that either it is cheaper than getting bank finances or the banks don’t want to finance it.”
The EFG Research Head added that there was something wrong for MTN to have wanted to raise the fund through the CP saying this type of borrowing should ordinarily be secured from the bank.
Understanding what CP entails: A Commercial Paper is an unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts payable and inventories and meeting short-term liabilities. Maturities on commercial paper rarely range longer than 270 days. Commercial paper is usually issued at a discount from face value and reflects prevailing market interest rates.