Dipo Olowookere
By Dipo Olowookere
Leading GSM network provider, MTN Nigeria Communications Plc, was forced to increase the amount it initially wanted to borrow from investors by N25 billion because of the interest from subscribers of its commercial paper sales.
The telco went to the capital market to source N100 billion via the sale of commercial paper, but due to its strong credit rating, it got more than it wanted.
According to a statement from the company, the exercise recorded a 146 per cent subscription rate, forcing the management to issue N125 billion worth of the short-term debt instrument.
MTN sold the CP in Series 6 and 7, with the former issued at a yield of 13.00 per cent and the latter at a yield of 13.50 per cent. Investors from various segments, including high net-worth individuals (HNIs), institutional investors, and others.
With the issuance of the papers to investors, MTN Nigeria has become the company with the largest combined commercial paper sale in a calendar year in the nation’s capital market.
The arranger and dealer for this transaction was Stanbic IBTC Capital Limited, while Chapel Hill Denham Advisory Limited, Coronation Merchant Bank Limited, FBNQuest Merchant Bank, FCMB Capital Markets Limited and Quantum Zenith Capital and Investments Limited were the joint dealers.
The chief executive of MTN Nigeria, Mr Karl Totiola, while commenting on the exercise, said, “We are pleased with the support received from the investor community, having recorded 146 per cent subscription. This reflects MTN Nigeria’s robust financial capacity, the brand’s strength, and our leading role in the industry.”
MTN Nigeria said the CP issuance aligns with its strategy to continue diversifying its funding sources and reducing its average cost of debt, with proceeds to “be applied towards short-term working capital requirements.”
Business Post reports that the Series 6 commercial paper was sold with a tenure of 181 days, while the Series 7 was with a maturity of 265 days.
