The FMDQ OTC Securities Exchange‘s Board Listings, Markets and Technology Committee, has approved the listing of N20.5 billion Commercial Papers by UACN Property Development Company Plc (UPDC), and Flour Mills of Nigeria Plc.
Breakdown of the Commercial Paper
The quotations include –Flour Mills’ N5.18 billion Series 5 and N1.74 billion Series 6 CP under a N100 billion CP issuance programme. Also included is UACN’s N5.62 billion Series 32 and N7.96 billion Series 33 CP under a N24 billion CP issuance programme.
Benefits of the listing to the companies
According to the FMDQ, in addition to the efficient registration process, the quotations of the Commercial Papers on its platform would avail Flour Mills and UACN many benefits, such as enhanced investor confidence in the issuers, transparent/relevant information disclosure on the issues, effective price formation, and global visibility.
FMDQ‘s statement read in part:
“In line with our strategic objectives to support institutional growth and stimulate continuous development of the economy at large, the FMDQ has shown its steadfastness in aligning the Nigerian debt capital markets to international standards through the promotion and provision of a world-class quotations service, availing issuers and investors the much-needed global visibility, confidence and protection in the markets.”
Understanding what commercial paper is
A Commercial Paper is an unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts payable and inventories and meeting short-term liabilities. Maturities on commercial paper rarely range longer than 270 days. Commercial paper is usually issued at a discount from face value and reflects prevailing market interest rates.
Commercial paper is not usually backed by any form of collateral, making it a form of unsecured debt. As a result, only firms with high-quality debt ratings will easily find buyers without having to offer a substantial discount (higher cost) for the debt issue. Because commercial paper is issued by large institutions, the denominations of the commercial paper offerings are substantial, usually $100,000 or more. Other corporations, financial institutions, wealthy individuals, and money market funds are usually buyers of commercial paper.