08 August 2018 ( Lagos ): Commercial Paper issuances by corporates have been on the rise so far in 2018 as companies refinance expensive debt amidst a much lower interest rate environment. Treasury yields have averaged 12.4% in 2018 vs. 2017 average of 17.9%. A breakdown of the current Commercial Paper Issuances from the FMDQ shows that interest in the market has been cut across major sectors, including Financial Services, Consumer Goods, and Industrial Goods. Currently, the discount rate on Commercial Paper (CP) listings as quoted on FMDQ show discount rate range of 12% - 14%, much lower than typical bank overdraft rates and a mild spread on treasury securities. 

Dangote Cement PLC currently has the largest outstanding CP value on the FMDQ after raising N50 billion out of its N150 billion CP shelf programme. Overall, analysts foresee further interest in the Commercial Paper market going forward, further supported by the CBN’s recent commitment to invest in Commercial Paper issuances by large corporates at single digit interest rates. 

Reporting for EasyKobo on Wednesday ,08 August 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited