Dipo Olowookere
By Dipo Olowookere
The proposed sale of N30 billion commercial paper by First City Monument Bank (FCMB) Nigeria Limited has been suspended by the management.
Last week, Business Post reported that the financial institution was issuing the debt securities to investors to sort its short-term funding needs.
The CP was to be issued under its N100 billion CP programme and was expected to have a tenor of 260 days.
“FCMB Group Plc hereby notifies the Nigerian Stock Exchange (NSE) and its esteemed shareholders that one of its subsidiaries, First City Monument Bank Limited, is undertaking a commercial paper issuance under its N100 billion CP programme.
“The CP has a tenor of 260 days with the aim of raising up to N30 billion to support the bank’s short-term funding needs.
“The CP serves as an additional funding source for the bank,” a notice issued last Thursday by the parent company of the lender, FCMB Group Plc, had said.
But on Monday, the company released another statement to state that the exercise has been suspended.
Explaining the rationale behind the action, FCMB said it was because of the shock increase in the stop rate of treasury bills last Wednesday by the Central Bank of Nigeria (CBN) at the primary market.
During the sale of T-bills last week, the apex bank raised the rate for the one-year instrument to 3.20 per cent from 0.15 per cent it offered it at the preceding session.
According to FCMB, this action by the central bank disrupted the price discovery of its commercial paper, forcing it to put the proposed exercise on hold.
“FCMB Group Plc hereby notifies the Nigerian Stock Exchange (NSE) and its esteemed shareholders that the proposed commercial paper issuance by one of its subsidiaries, First City Monument Bank Limited has been suspended.
“This is as a result of the Nigerian Treasury Bills auction of Wednesday, December 9, 2020, which distorted price discovery,” the notice issued today said.
