MTN Nigeria issues N125bn commercial papers at record yields

MTN Nigeria Communications Plc has spent more for short-term funding sources it is necessary to uplift working capital in a way commercial papersthe company said in a statement on Friday.

Attracting interest on commercial paper issued on March 1, the price of the paper has risen to an unprecedented level to compensate investors for the impact of inflation on the yield of these securities.

“MTN Nigeria issued 188-day commercial paper at a yield of 11.00% and 267-day commercial paper at 12.50%,” the company said in a Monday note to the Nigerian Exchange.

The development reflects the deepening debt woes of Nigerian companies, where the central bank’s measures to curb inflation have pushed debt levels to their highest levels in 17 years.

The company has two commercial papers of the same age that were published last April. The first has a tenor of 184 days priced at 7.5 percent, and the second runs for 254 days yielding 8.5 percent.

At Central Bank of Nigeria has increased the monetary rate five times in the current trot, summing up to 600 basis points and forcing the company to pay more for new debt.

MTN Nigeria, the country’s largest public company by revenue, raised N125 billion from its latest issuance, initially planning to source N100 billion, according to a notification to the Nigerian Exchange on March 6, 2023.

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The first commercial paper issuance took place in June 2020 when it raised N100 billion, the issuance was 400 percent subscribed.

Last June, the rating agency GCR meant short-term issuer ratings of A1 + (NG) for MTN Nigeria, which means that the telecommunications operator has “the highest certainty of timely payment of short-term obligations relative to issuers or other obligations in the same country.”

The company’s earnings before interest, tax, depreciation and amortization for 2022, a basic metric for gauging credibility, rose 22 percent to N1.1 trillion.