In a regulatory filing that was seen by Business Insider Africa, MTN Nigeria explained that the commercial paper issuance is part of a strategy to diversify its financing options.
The series 1 & 2 commercial paper issuance is under MTN Nigeria’s N150 billion ($361.8 million) commercial paper programme. Proceeds from the exercise would go towards boosting the telco’s working capital, as well as serving other general corporate purposes.
It should be recalled that MTN Nigeria recently received a final approval from the Central Bank of Nigeria to begin operating Momo Payment Service Bank Ltd in the West African country. As such, it would be needing some working capital to facilitate the new venture.
“MTN Nigeria Communications Plc (MTN Nigeria or the Company) hereby notifies Nigerian Exchange Limited and the investing public of its N127 billion series 1 & 2 commercial paper issuance under its registered N150 billion commercial paper programme,” said a part of the public notice.
Stanbic IBTC Capital Ltd served as the main book runner for the deal, according to the statement by MTN. Chapel Hill Denham Advisory Ltd also helped to arrange the deal, alongside Coronation Merchant Bank, FBNQuest Merchant Bank, Standard Chartered Capital and Advisory Nigeria Ltd, FSDH Capital and UCML Capital.
The commercial paper is divided into two tenors. The first one is a 184-day-tenored issuance which would be priced at 7.50% yield. This would then be followed by another 254-day-tenored series 2 issuance which would be priced at an 8.50% yield.
Investopedia defines commercial paper as an unsecured, short-term debt instrument commonly used by companies to raise capital from the public and take care of their short-term financial liabilities. The maximum maturity date for a commercial paper is typically 270 days.
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