FBNQuest Merchant Bank Sells N15bn Commercial Paper

March 14, 2022
FBNQuest Merchant Bank

By Aduragbemi Omiyale

A subsidiary of FBN Holdings Plc, FBNQuest Merchant Bank Limited, is selling commercial paper worth N15 billion to investors.

The lending institution in the real estate industry is offering the debt instrument in two series and the exercise is expected to close on Tuesday, March 15, 2022.

Business Post reports that series 1 is with 180 days maturity, while series 2 has 270 days tenor, according to details of the exercise.

The discount rate for the six-month paper is 7.9275 per cent and has an implied yield of 8.2500 per cent, while the discount rate for the nine-month paper is 8.4382 per cent and an implied yield of 9.0000 per cent.

Based on the new law in Nigeria, the Federal Inland Revenue Service (FIRS) will charge intending investors a withholding tax for the commercial paper.

Recall that the Nigerian government had by an order dated January 2, 2012, exempted bonds and short-term government securities from income tax for a period of 10 years.

The exemption expired on January 1, 2022, except for debt instruments issued by the federal government. Consequently, income tax now applies to income derived by companies from bonds and short-term securities effective from January 2, 2022, except for bonds sold by the central government.

According to the FIRS, investors in the nation’s capital market will now be required to pay withholding tax on treasury bills, promissory notes, bonds issued by state and local governments and their agencies, bonds issued by corporate bodies including supra-nationals as well as interest earned from the asset classes.

Aduragbemi Omiyale

Aduragbemi Omiyale is a journalist with Business Post Nigeria, who has passion for news writing. In her leisure time, she loves to read.

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