Nigeria’s most capitalised quoted company and cement maker, Dangote Cement Plc, has issued new N50 billion in Commercial Papers (CP) in order to meet short term financial obligations.
The exercise, which is the second of its kind in barely three weeks, represents the eight of the tenth series of the company’s N150 billion commercial paper program.
Commercial paper is a short-term debt security issued by financial companies and large corporations. By issuing commercial paper to raise short term funds, companies avoid the time and cost of applying for business loans, as well as SEC registration.
Commercial paper is unsecured, meaning buyers have no claim on a company’s assets if the company fails to pay up at maturity. It is often offered in the short term, usually not exceeding 270 days and is backed only by an issuing bank or company promise to pay the face amount on the maturity date specified on the note.
The eight series has a tenor of 90 days with an effective yield of 12.5254 percent discounted at 10.51 percent with a maturity date of 12 September 2019.
The ninth series, however, has a 180-day tenor with an effective yield of 12.5254 percent and a discount rate of 13.35 percent with a maturity date of 11 December 2019.
The tenth series, which offers CP of 270 days with an effective yield of 12.6862 percent, and a discount of 14 percent, is expected to mature on the 10th of March 2020. The offer had opened on 7 June 2019 while the offer’s application list had closed on 13 June 2019.
The minimum subscription was N5 million and subsequently in multiples of 1000. Although the CPs were allotted on the closure date, they were issued on 14 June 2019.
OLUFIKAYO OWOEYE
