FBNQuest Merchant Bank Sells Commercial Paper worth 15 Billion Naira

FBNQuest Merchant Bank Sells Commercial Paper worth 15 Billion Naira

FBNQuest Merchant Bank Limited, a part of FBN Holdings Plc, is offering commercial paper worth N15 billion to investors.

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Commercial paper is a sort of unsecured, short-term financial instrument issued by businesses that are often used to fund payroll, accounts payable, and inventories, as well as meet other short-term obligations. On commercial paper, maturities typically last a few days and rarely exceed 270 days.

Commercial paper is frequently sold at a discount to its face value, reflecting current market interest rates.

The debt product is being offered in two series by a real estate financing organization, with the exercise set to expire on Tuesday, March 15, 2022.

According to the specifics of the exercise, series 1 has a maturity of 180 days, while series 2 has a tenor of 270 days.

The six-month paper's discount rate is 7.9275 percent, with an indicated yield of 8.2500 percent, while the nine-month paper's discount rate is 8.4382 percent, with an implied yield of 9.0000 percent.

The Federal Inland Revenue Service (FIRS) in Nigeria would charge potential investors a withholding tax for the commercial paper under a new law.

Remember that the Nigerian government exempted bonds and short-term government securities from income tax for a period of ten years through an order dated January 2, 2012.

Except for debt instruments issued by the federal government, the exemption terminated on January 1, 2022. As a result, beginning January 2, 2022, income tax will apply to income earned by firms from bonds and short-term securities, with the exception of bonds sold by the government.

Investors in the country's stock markets will now be obligated to pay withholding tax on treasury bills, promissory notes, bonds issued by state and local governments and their agencies, bonds issued by financial institutions including supra-nationals, and interest earned from the asset classes, according to the FIRS.