Economy

How to Make More Money Investing in Commercial Papers

Published

7 years ago

29/01/2019

Modupe Gbadeyanka

By FSDH Research

As most savvy investors will tell you, it is important to put your money to work in order to grow your wealth.

In this report, we will show you how you can achieve this goal through investing in Commercial Papers (CPs).

If you have ever bought an item from a discount shop, then you have a basic understanding of how you can invest in a commercial paper to grow your wealth.

Investing in a CP may be likened to buying items from a discount shop or buying items that are on sale in a supermarket. Usually, a discount shop gives you an opportunity to pay a price that is lower than the price tag on the item.

For instance, if the price tag on a perfume is N20 but the shop places a 10% discount (i.e. N2) on the perfume, it means that you will pay N18 (i.e. N20 less N2) for it.

The only difference between this simple calculation and a case of CP investment is that you must take into account the number of days the investment will run, so as to determine the actual discount you will receive on the investment.

So, when you invest in a CP, you pay an amount that is lower than the amount you will receive on the day the investment is ripe for harvest (matures).

CPs are notes of promise that large companies use to borrow money from people or companies. The company issuing the CP usually borrows the money for a short period of time, always less than one year. CPs are issued in tenors ranging between a minimum of 15 days and a maximum of 270 days.

Companies typically use the money they borrow to finance their operations in order to generate more income.

The Securities and Exchange Commission (SEC) regulates the CP market in Nigeria. The primary duty of SEC in Nigeria is to formulate rules and guidelines that protect investors’ interests and ensure orderly development of the investment market.

Usually, the investment window in CPs opens for a short period of time – in most cases, one week. The issuing company determines the minimum amount that investors can invest, which is typically N5 million but may be lower in some cases.

Investment in CPs is similar to investment in Nigerian Treasury Bills (NTBs) in that both instruments are discounted instruments.

However, the main difference is that while NTBs are used by the Federal Government of Nigeria (FGN) to borrow money, CPs are used for the same purpose by companies.

FSDH Research notes, however, that despite being relatively low-risk because of their short maturity period, the risks inherent in investing in CPs are still higher than the risks inherent in investing in NTBs.

FSDH Research believes that a number of companies may issue CPs this year to raise funds to finance their operations, as against using Bonds to raise long-term funds.

This is based on our view that interest rates will increase because of an expected increase in the inflation rate.

This will create more investment opportunities for investors in the CP market, especially given that the yields on CPs are usually higher than those on NTBs.

In addition to higher yields, another advantage of CPs is that the income investors earn from them is not subject to taxes.

This is an incentive from the FGN to encourage the development of the CP market in Nigeria. Investment banks or investment management companies regularly introduce available CPs in the market to their clients whenever the offer is open for subscription. The FMDQ OTC Securities Exchange provides a platform for trading in CPs in Nigeria.

As such, CP investments are relatively liquid as they can be traded in the secondary market if investors wish to sell before maturity.

Now that you have a full understanding of the potential of CPs for wealth creation, we know you would not want to miss any opportunity to invest in CPs.

Economy

Four Securities Erase N51.17bn from NASD Exchange

Published

25 minutes ago

27/06/2026

Adedapo Adesanya

By Adedapo Adesanya

Four securities weakened the NASD Over-the-Counter (OTC) Securities Exchange by 1.95 per cent on Friday, erasing N41.17 billion from the bourse, which had its market capitalisation at N2.567 trillion compared with the previous session’s N2.618 trillion.

In the same vein, the NASD Unlisted Security Index (NSI) decreased at the close of business by 85.28 points to 4,277.07 points from 4,362.32 points.

The price decliners were led by 11 Plc, which gave up N20.50 to sell at N200.50 per share compared with the preceding day’s N221.00 per share, FrieslandCampina Wamco Nigeria Plc dropped N16.94 to close at N155.20 per unit versus Thursday’s closing price of N172.14 per unit, Central Securities Clearing System (CSCS) Plc went down by N2.11 to N84.68 per share from N86.79 per share, and Afriland Properties Plc lost 11 Kobo to end at N16.74 per unit, in contrast to the N16.85 per unit it closed a day earlier.

During the trading day, the value of transactions jumped by 172.1 per cent to N29.9 million from the preceding session’s N10.9 million, and the volume of trades soared by 136.5 per cent to 955,096 units from the previous 403,901 units, while the number of deals went down by 11.4 per cent to 31 deals from 35 deals.

Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units worth N6.5 billion, and CSCS Plc with 68.6 million units sold for N4.7 billion.

GNI Plc also ended the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, trailed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.

Economy

Cautious Trading, Profit-taking Weaken Nigeria’s Stock Exchange by 0.66%

Published

47 minutes ago

27/06/2026

Dipo Olowookere

By Dipo Olowookere

The last trading session of this week on the floor of the Nigerian Exchange (NGX) Limited ended on a negative note, with a 0.66 per cent loss on Friday.

This was influenced by sustained selling pressure and cautious trading, which forced investors into profit-taking.

Data obtained by Business Post showed that the energy sector fell by 4.66 per cent, the insurance counter dipped by 2.23 per cent, the consumer goods index depreciated by 0.96 per cent, and the banking segment shed 0.28 per cent, while the industrial goods space remained unchanged.

At the close of business, the All-Share Index (ASI) of Nigeria’s stock exchange went down by 1,531.81 points to 232,049.02 points from 233,580.83 points, and the market capitalisation dropped N983 billion to settle at N148.905 trillion compared with Thursday’s N149.888 trillion.

Aradel was the worst-performing equity after it lost 10.00 per cent to close at N1,417.50. International Energy Insurance slipped by 9.95 per cent to N5.79, Trans-Nationwide Express depreciated by 9.89 per cent to N3.28, eTranzact crashed by 9.79 per cent to N14.75, and UPDC slumped by 9.72 per cent to N28.12.

The best-performing equity for the day was Universal Insurance, which gained 6.32 per cent to close at N1.01, McNichols grew by 5.52 per cent to N8.60, Linkage Assurance expanded by 4.67 per cent to N1.57, NGX Group appreciated by 4.35 per cent to N120.00, and Transcorp increased by 3.62 per cent to N41.50.

As look at the activity level indicated that investors traded 388.7 million stocks worth N18.4 billion in 44,631 deals compared with the 393.7 million stocks valued at N19.2 billion executed in 45,813 deals a day earlier, representing a decline in the trading volume, value, and number of deals by 1.27 per cent, 4.17 per cent, and 2.58 per cent, respectively.

Economy

Official FX Market Sees Naira Dip to N1,380.93/$1

Published

48 minutes ago

27/06/2026

Adedapo Adesanya

By Adedapo Adesanya

The Naira recorded a loss of 82 Kobo or 0.06 per cent against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, June 26, exchanging at N1,380.93/$1, in contrast to the previous day’s rate of N1,380.11/$1.

Equally, the domestic currency further weakened against the Pound Sterling in the official FX market yesterday by N6.06 to settle at N1,824.90/£1 versus the preceding session’s N1,818.84/£1, and lost N10.74 on the Euro to sell at N1,577 .58/€1 versus N1,566.84/€1.

At the GTBank forex counter, the Naira depreciated against the greenback during the session by N4 to close at N1,387/$1, in contrast to Thursday’s value of N1,383/$1, and at the parallel market, it was unchanged at N1,395/$1.

Interbank FX activity among financial institutions has fluctuated amid a sharp slowdown in forex market interventions by the Central Bank of Nigeria (CBN), as it allows demand and supply to move the market.

Also, a stronger greenback has generally put significant pressure on emerging-market currencies.

Nigeria has accessed the first tranche of a proposed $5 billion derivatives financing arrangement with First Abu Dhabi Bank PJSC, the largest lender in the United Arab Emirates (UAE).

The $5 billion facility, approved by the National Assembly earlier this year, is part of the federal government’s plan to diversify external financing sources and reduce borrowing costs. Structured as a Total Return Swap with First Abu Dhabi Bank, proceeds are earmarked for refinancing debt and supporting infrastructure financing.

If the proceeds are brought into the country through the official FX market, the transaction will increase the currency reserves or Dollar liquidity.

At the cryptocurrency market, Solana (SOL) grew by 2.2 per cent to $71.92, Cardano (ADA) gained 1.1 per cent to trade at $0.1474, Ripple (XRP) also appreciated by 1.1 per cent to $1.05, Dogecoin (DOGE) expanded by 0.9 per cent to $0.0755, and Ethereum (ETH) improved by 0.4 per cent to $1,578.84.

On the flip side, TRON (TRX) slid 0.6 per cent to $0.3203, Binance Coin (BNB) slumped by 0.3 per cent to $564.33, and Bitcoin fell by 0.2 per cent to $60,219.37, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.