The Nigerian commercial paper (CP) market is experiencing a remarkable resurgence, with total issuances surging from N92 billion in June 2024 to N370 billion by May 2025, representing a N278 billion rise or approximately 302.2per cent increase over the 12 months.
The surge marks a clear shift in corporate funding strategy, as businesses seek respite from the harsh borrowing environment.
As borrowing costs soar, more companies are turning to the capital market to meet their funding needs.
With bank lending rates now approaching 40 per cent, traditional credit has become a costly and unsustainable option, particularly for firms heavily reliant on working capital.
Analysts noted that the shift is being accelerated by the Central Bank of Nigeria’s (CBN) monetary tightening.
A key driver is the recent hike in the cash reserve ratio (CRR) to 50 per cent, which compels commercial banks to sterilise half of their deposits, further limiting liquidity and tightening access to credit.
Although aimed at curbing inflation and absorbing excess liquidity, they noted that the policy has inadvertently strained banks’ lending capacity.
With less funds available for loans, financial institutions have been compelled to hike lending rates in a bid to preserve margins and sustain profitability.
While intended to mop up excess liquidity, the move is currently having a knock-on effect on banks’ ability to lend, constricting credit availability and forcing financial institutions to raise lending rates.
Access Bank has emerged as the most aggressive issuer, raising N193.25 billion through two tranches of commercial papers. The offers provided investors with competitive yields ranging from 21.5 per cent to 24.75 per cent, reflecting the risk-adjusted return profile that is currently attracting significant interest from institutional and high-net-worth investors.
MeCure Industries followed, raising N10 billion at an interest rate of 26 per cent, a strong signal of demand even among healthcare and pharma companies.
Daraju Industries, with a N4 billion issuance offered up to 25 per cent, reinforcing confidence in the consumer goods segment.
Other key issuers include Finceptive, a fintech-driven issuer new to the debt market, which raised N3 billion with a 268-day tenor, showing that even younger firms are leveraging structured debt to fund expansion.
FCMB also joined the league of major issuers with a N70 billion dual-series offer, highlighting growing participation from banking and financial institutions themselves.
Several other firms across sectors have joined the issuance wave, including FSDH Merchant Bank, Stanbic IBTC, C& I Leasing, Dangote Sugar, Dangote Cement and Addosser Microfinance Bank.
For investors, CPs are emerging as an increasingly attractive asset class, offering yields that outpace inflation, currently hovering around 23 per cent.
With returns in the range of 21 per cent–26 per cent, CPs present a strong case for fixed-income investors looking to preserve capital and earn high returns in a volatile environment.
