MTN Nigeria Communications Plc has approached the Nigerian Securities and Exchange Commission for a new N200 billion Bond Issuance Programme.
The telecom giant said the loan will be used for operation expansion, capital expenditure, working capital management and general corporate purpose.
The bond application, which is contained in a disclosure filed by MTN to the Exchange, marks the second time MTN Nigeria would announce a plan to source funds from the debt market.
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“MTN Nigeria Communications Plc has applied to the Securities and Exchange Commission in respect of the registration of a new N200 billion Bond Issuance Programme (Second Bond Issuance Programme).
“This second Bond Issuance Programme is a follow-on to the successful N200 billion debut Bond Issuance Programme in 2021 under which the company issued the N110 billion 13.00% 7-year series I bond due by 2028 and N90 billion 12.75% 10-year series II bonds due 2031. The proceeds of the bond issuance will be used for capital expenditure (network expansion), working capital management and general corporate purpose.
“The company will decide on issuance under the second Bond issuance Programme in due course subject to prevailing market conditions and obtaining relevant regulatory approvals,” the company said in a statement.
MTN has the highest credit rating of all the companies in Nigeria followed by Dangote Cement. In April, the company issued N127 billion in commercial paper.
But interest rate was hiked on Tuesday by the Nigeria’s Monetary Policy Committee to 14 percent, posing a challenge that MTN did not see coming before it applied.
The Central Bank of Nigeria has been raising interest rate to contain rising inflation, a situation many believe would dampen the interest of big corporations in raising bonds.
However, business leaders believe that the interest rate is likely going to increase further, thus, making now the ideal time for companies to raise bonds.
“As it is now, liquidity is quite low, and that is one of the factors also contributing to increase in yields coupled with the increase in the monetary policy rate that we just saw today,” Damilare Ojo, who heads the research unit of investment bank Meristem Securities, told PREMIUM TIMES.
“It means that cost of borrowing will continue to increase, and I think it’s just good for anybody including MTN to come to the market as soon as possible because it is very much likely that rates will continue to increase.”