FSDH Merchant Bank N15bn Commercial Paper Sales End

By Aduragbemi Omiyale

The sale of commercial papers worth N15 billion to investors by FSDH Merchant Bank Limited will close today, Thursday, January 19, 2023.

The exercise commenced on Monday, January 16, 2023, with the sole purpose of using proceeds for the short-term working capital requirements of the organisation.

The lender, which provides funds to large corporations and high-net-worth individuals (HWNIs), is selling Series 11, 12 and 13 of its N40 billion commercial paper issuance programme.

Business Post learned that Series 11 has a tenor of 90 days and a discount rate of 11.62 per cent. Series 12 has a maturity of 176 days and a discount rate of 11.97 per cent, and Series 13 has a tenor of 267 days and a discount rate of 12.29 per cent.

The minimum subscription of the paper is N5 million, and multiples of N1,000 after that.

Corporate organisations in Nigeria have found love in commercial paper sales because it is cheaper than funds taken from commercial banks.

Recall that last week, Nigerian Breweries accessed the capital market for commercial papers, issuing N20 billion to investors. The exercise ended on Monday, January 16.

FSDH Merchant Bank was incorporated in June 1992 and was the first discount house to operate in Nigeria. It is a subsidiary of FSDH Holding Company, which has an asset management business, a capital business, and a pension fund administrator.

The company has three major income streams: interest income, fees and commission, and trading income. In the 2021 fiscal year, its gross earnings went down by 15.49 per cent to N13.79 billion due to the significant decrease in the trading income (which accounted for about 8 per cent of gross earnings).

But in the first nine months of 2022, its gross earnings grew by 81.03 per cent to N17.7 3 billion, as a result of double digit annual growth in all business lines.

The main service FSDH Merchant Bank renders to its customers is the provision of merchant banking services, involving around transactional products and the structuring of finance and money market activities (including trading and holding marketable securities).