MTN Nigeria is reportedly planning to raise N100 billion through Commercial Paper (CP) but the tleco is keeping sealed lips about the offer.
But an official suggested that the firm would issue the commercial paper through the Nigerian Stock Exchange (NSE) shortly.
Reacting to reports of the proposed plan, uesday, Utoh Ukpanah, the company secretary, said that MTN is exploring every financing option, including the issuance of commercial paper to boost its operations.
Earlier, Kato Mukuru, head of Frontier Research at EFG Hermes, had told CNBC in an interview that the company will issue commercial paper through the NSE.
Mukuru said he got reliable information from a staff member of the Nigerian Stock Exchange that MTN was about to issue the N100 billion commercial paper.
On the reason for the plan, Mr Mukuru noted that the company may have opted for the commercial paper because “either it is cheaper than getting bank finances or the banks don’t want to finance it.”
The EFG staff added, however, that that form type of borrowing should ordinarily be secured from the bank.
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. Commercial paper is usually traded among large institutions, but individual investors can participate by buying from a broker.
In its statement Tuesday, MTN said that in its Listing by Introduction Memorandum, it already indicated that in the past, MTN financed its expenditure through syndicated banking facilities but it would henceforth explore other financing opportunities, including the issuance of commercial papers.
The company said it will announce the development through the Nigerian Stock Exchange at the appropriate time.
“Shareholders are reminded to exercise caution when reacting to information which has not been released by the company,” the statement said.