FBNQuest Merchant Bank, the investment banking and asset management group of FBN Holdings Plc, is recommending commercial papers and bonds to corporate issuers seeking to raise working capital, expansion capital, refinance expensive debt and better match their cash obligations with revenues.
Speaking at the latest edition of the Leading Conversations with FBNQuest webinar series, Oluseun Olatidoye, Head Capital Markets, FBNQuest, noted that many companies do not take advantage of Nigeria’s growing commercial paper and bond market to access stable funds that match their capital needs.
“Even though interest rates have trended higher in the first quarter of this year, there is still significant scope for many companies to access cheaper and more stable funding from investors who are seeking well-run businesses with predictable cashflows to invest in” said Olatidoye.
The webinar with the theme ‘Funding through Commercial Papers and Bonds’ was hosted to engage corporates and investors on the opportunities within issuing and investing in commercial papers and bonds. Other speakers included Sumit Jain, Senior Executive Director at Valency International, a leading food ingredient supply chain company.
He echoed the sentiment about the benefits of issuing commercial papers. ”We believe that corporates can lower the interest paid on bank debts by up to 4 percentage points by issuing commercial papers. Loans also offer other tremendous benefits in the current macroeconomic environment” said Sumit Jain.
Nigeria’s capital market has recorded a flurry of corporate commercial papers and bond issues since a sharp decline in interest rates in the third quarter of 2020. “We think the market conditions have just cast the spotlight on a financing option that discerning companies should consider. We look forward to working with our clients to navigate the process to issuing CPs and bonds and therefore unlocking the efficiency and convenience that these instruments offer” stated Olatidoye.
As a leading investment banking institution, FBNQuest has advised on the issuance of several commercial papers transactions for organisations such as Valency Agro Nigeria Limited, Mixta Real Estate plc, Dangote Cement plc, Nigerian Breweries plc (NB), Lafarge Africa plc, Flour Mills of Nigeria plc (FMN), Wema Bank plc, and UACN Property Development Company plc (UPDC) to mention a few. These transactions add to the organisations impressive portfolio of organisations it has supported, and once again highlights its capabilities in the successful execution of sizeable capital market and commercial debt transactions.