High Interest Rate: MTN Resort To Commercial Paper, Raises N52.89bn

MTN Nigeria Communications Plc has successfully raised N52.8bn commercial paper after high interest rates pushed the telecom company to resort to the debt instrument.

The company said it has successfully completed its Series 8 & 9 Commercial Paper issuance under its upsized N250bn Commercial Paper Issuance Programme.

The instruments were the 182-day commercial papers at a yield of 14.00 per cent and 267-day commercial papers at a yield of 16.00 yield.

The telco said it hoped to raise N52.89bn across both series and the offer was fully subscribed by investors while the issuance was completed on Tuesday, 7 November 2023.

MTN Nigeria said it issued the CP as a strategy to reduce its average cost of debt and diversify its funding sources and the N52.89bn will be applied towards short-term working capital requirements.

The Chief Executive Officer MTN Nigeria, Karl Toriola, said the transaction demonstrates investor confidence in the performance and management of the telecom company.

He said, “The market terrain is changing and managing our funding costs is a key focus. The transaction was concluded in record time and this could not have been possible but for the unwavering support of our advisers and the investor community.”

Analysis conducted by THE WHISTLER on the company’s third-quarter interim financial statement shows MTN Nigeria spent N397.1bn on finance costs.

Its books further revealed that the group’s interest rate risk arose from the repricing of the group’s floating rate debt, incremental funding or new borrowings, the refinancing of existing borrowings and the magnitude of the significant cash balances that exist.

The gross debt of the company rose to N1.02trn in September 2023 from the N689.67bn that the group incurred as of December 2022.