Nigeria’s commercial paper (CP) market surged by 107.16% to N1.58 trillion in new listings from January to July 2025, compared to N763.43 billion in the same period of 2024, according to the FMDQ Financial Markets Monthly report analyzed by The PUNCH. Significant spikes in March (+270.9%) and July (+1,686%) accounted for 46% of the year’s listings, driven by businesses seeking short-term financing to navigate funding pressures in a high-interest-rate environment.
Commercial papers, unsecured short-term debt instruments used by corporations for payroll, payables, and inventories, saw robust growth despite declines in January (-4.8%) and April (-3.9%). By July’s end, outstanding CP value rose 15.3% month-on-month to N1.54 trillion, with maturities totaling N112.94 billion. Companies like MTN Nigeria, Access Bank, Dangote Industries, and Fidson Healthcare tapped the market, particularly in manufacturing and financial services.
Agusto & Co.’s Banking Sector Report attributes the surge to the Central Bank of Nigeria’s (CBN) tight monetary policy, with the Monetary Policy Rate at 27.5%. The banking sector’s liquidity ratio reached 59.4% in 2023, projected to exceed 60% by 2025, supported by treasury securities’ yields. Norrenberger’s report notes CP discount rates hit 25% for 270-day tenors, prompting firms to favor short-term instruments over bonds, which grew only 0.3% in outstanding value.
With inflation easing to 21.88% in July, analysts anticipate a potential 200-basis-point rate cut by year-end, which could lower borrowing costs and boost investment. However, risks like global commodity price volatility, geopolitical tensions, and naira fluctuations (N1,560/$1 in the parallel market) may prompt the CBN to maintain a cautious stance. Nigeria’s economic resilience, with a 67.12% rise in capital importation to $5.64 billion in Q1 2025, underscores the CP market’s role in sustaining corporate liquidity.
