Financial obligations force MTN Nigeria to borrow N125bn from commercial paper investors.
Truetells Nigeria reports that MTN Nigeria said its commercial paper issuance was oversubscribed in the capital market, leading to the company raising N125 billion, a statement released to the Nigerian Exchange Limited disclosed.
The telecommunications company said it recorded 146 per cent subscription in its Series 6 & 7 Commercial Paper issued under the firm’s N250 billion Commercial Paper Issuance Programme.
MTN Nigeria is diversifying its funding sources and reducing its average cost of debt through commercial paper to finance the network provider’s short-term working capital requirements.
Commercial Paper is a short-term, unsecured debt that isn’t backed by collateral or assets. It comes with a lower interest compared to bank loans, which are more stressful and costly to obtain.
Prime Business Africa gathered that 181-day commercial paper was issued on 23 August 2023 at a yield of 13 per cent and 265-day commercial paper at a yield of 13.50 per cent.
In the statement, MTN said: “MTN Nigeria Communications PLC (MTN Nigeria) hereby notifies Nigerian Exchange Limited and the investing public of the successful completion of its Series 6 & 7 Commercial Paper issuance under its upsized N250 billion Commercial Paper Issuance Programme (the “CP Issuance”).
“MTN Nigeria sought to raise N100 billion, and the offer recorded 146% subscription with N125 billion issued across both series. This represents the largest aggregate CP issuance within a calendar year by any corporate in Nigeria’s debt capital markets.
“MTN Nigeria issued 181-day commercial paper at a yield of 13.00% and 265-day commercial paper at a yield of 13.50%, with an issue date of 23 August 2023.
“The CP Issuance aligns with MTN Nigeria’s strategy to continue diversifying its funding sources and reducing its average cost of debt. The proceeds will be applied towards short-term working capital requirements.”
Speaking on the capital raised, MTN Nigeria’s Chief Executive Officer, Karl Toriola, said: “We are pleased with the support received from the investor community, having recorded 146% subscription. This reflects MTN Nigeria’s robust financial capacity, the brand’s strength, and our leading role in the industry.”
