In 2024, the issuance of commercial papers and corporate bonds saw a notable decline, as the high-interest rate environment led to a decrease in the number of instruments issued and the amounts raised.
According to reports from the FMDQ and Afrinvest Securities, commercial paper issuances fell by 5% to 133 from 140 in 2023, with the total amount raised dropping by 12.2% to N790bn from N900bn. The average discount rate also rose to 27% from 16.4% in the previous year. Leading companies like Dangote Sugar Refinery, Dangote Cement, and Flour Mills were top issuers, collectively raising substantial amounts.
On the corporate bonds front, the number of issuances decreased sharply from four in 2023 to just one in 2024, with the total raised plunging by 98.8% from N94.5bn to N1.2bn. The average coupon rate also rose to 18% from 15.7%. The top corporate bond issuance of the year came from Eat & Go Finance SPV Plc.
This dip in both commercial paper and corporate bond issuances is attributed to the Central Bank of Nigeria’s hawkish stance throughout 2024, raising interest rates to tackle inflation. The high interest rates, peaking at 27.5%, led to increased borrowing costs, dampening business borrowing appetite and contributing to a decline in consumer credit.
The rising cost of borrowing has drawn criticism from business stakeholders, with the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture pointing to a disconnect between the Central Bank’s policies and the needs of businesses.
