AFRINVEST Capital Limited has announced the launch of AB Microfinance Bank Nigeria Limited’s N3.0billion Series 4 Commercial Paper Notes under its N9.0 billion Commercial Paper Issuance Programme.

The commercial paper presents an opportunity to invest in one of the leading microfinance banks in Nigeria owned by the largest Development Financial Institutions in the world.

AB Microfinance Bank (the “Issuer” or “AB” or the “Bank”) was incorporated in Nigeria under the Companies and Allied Matters Act as a Limited Liability Company on 15th May 2008.

The Bank is one of the nine (9) national microfinance banks licensed by the Central Bank of Nigeria (CBN).

AB Microfinance Bank is owned by Access Microfinance Holding Germany, which is in turn owned by International Finance Corporation (IFC), Triodos Investment Management, British International Investment, responsibility (Impact investor), LFS Advisory, European Investment Bank, KfW- German Development Bank, and Omidyar-Tufts Active Citizenship Trust.

Other direct shareholders of AB Microfinance Bank include African Development Bank, International Finance Corporation (IFC), and KFW- German Development Bank. The shareholders are “AAA” international rated organizations.

AB is a financial institution set up to provide credit to its customers, including individual and corporate clients, for all legally permissible purposes including business development, home improvement, education, or consumption.

By building stable relationships with clients, employees, and other stakeholders, AB aims to be the leading Nigerian lender for micro, small and mid-sized companies as well as offer safe and profitable savings opportunities.

The launch notice from Afrinvest noted that the Bank is committed to its passion of helping to improve the business opportunities of entrepreneurs by availing them of easy access to affordable loans, also, improving the general financial status of everyone with its deposit accounts.

AB Microfinance Bank Nigeria Limited is rated ‘A2’ by DataPro and ‘Bbb+’ by Agusto & Co.

As of January 10, 2024, Nigerian companies have already issued about N90.01 billion in commercial papers. This is according to data from FMDQ Group.

In 2023, Nigerian companies issued about N1.5 trillion worth of commercial papers,, a reflection of the rising importance of the debt market to raising capital in the Nigerian corporate scene.

In 2023, these three companies, MTN Nigeria, Dangote Cement, and Flour Mills of Nigeria accounted for 49.7% of the total CP issuances, as they issued N375 billion, N221.78 billion, and N150.97 billion in commercial papers respectively.

Dangote Cement initiated a N150 billion commercial paper program in 2021, later expanded to N300 billion in July 2023. As of now, the company has issued approximately N281.79 billion in commercial papers under the expanded N300 billion.

Commercial papers are increasingly favored by Nigerian corporates for cost-effective fund-raising, as banks impose high-interest rates amid the Monetary Policy Rate (MPR) which increased from 22.75 per cent to 24.75 per cent and a 32.5percent cash reserve ratio. The elevated interest rates from banks are often unfavorable to businesses.

Investors increasingly turn to commercial papers, offering attractive returns in a short time frame and generally considered low risk.

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