Nigerian Breweries set to raise N15bn through CP issuance

Nigerian Breweries Plc plans to raise N15 billion in the first and second series of its N100 billion Commercial Paper (CP) programme.

The fund will be raised to support the company’s short-term funding requirements.

The company is offering offering 11.59 percent and 14.43 percent yield on its 90- and 182-day CP.

It was gathered that the offer for the series 1 and 2 commercial papers, which opened on Thursday, April 11, 2019, will last for a week and close on Thursday, April 18, 2019. The settlement date will be Tuesday, April 23, 2019.

The Series 1 commercial paper has a tenor of 90 days, an effective yield of 11.59 percent, and a discount rate of 11.268 percent.

The Series 2 commercial paper has a tenor of 182 days, an effective yield of 14.43 per cent and a discount of 13.46 per cent.

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.

About the Nigerian Breweries Plc

Nigerian Breweries Plc is the pioneer and largest brewing company in Nigeria. It serves the Nigerian market and exports to other parts of West Africa. The firm engages in brewing, marketing, and selling of lager, stout, non-alcoholic drinks, and soft drinks in Nigeria.

The company was formerly known as Nigerian Brewery Limited before it changed its name to Nigerian Breweries Plc in 1990. The company was founded in 1946 and is headquartered in Lagos, Nigeria.

Nigerian Breweries Plc is currently traded ₦60.20 in the last trading session of the Nigerian Stock Exchange (NSE).

Source: Nairametrics

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