Nigeria’s commercial paper (CP) market recorded rapid expansion in 2025, underscoring how corporates are reshaping their funding strategies amid persistently high borrowing costs in the banking system.
Data from the Securities and Exchange Commission (SEC) show that CP programmes worth about N1.37 trillion had been approved as of October 23, 2025. Yet only about N753 billion was actually raised, pointing to a utilization rate of roughly 54% and highlighting a cautious, phased approach by issuers.
The growing gap between programme approvals and actual drawdowns suggests that while companies are securing headroom for funding, many are choosing to access the market selectively rather than exhaust approved limits at once. Analysts say this reflects a strategy of flexibility, allowing firms to respond to cash flow needs and interest rate movements without locking themselves into larger short-term obligations.
Issuance activity during the period was heavily skewed towards a handful of large corporates, with Dangote Sugar Refinery Plc standing far ahead of the rest. Operating under a N300 billion CP programme, the company accounted for more than 45% of total issuance, raising over N300 billion across multiple series and tranches. Individual issuances ranged from as little as N4.7 billion to as much as N96.7 billion, spanning Series 10 through Series 16.
Dangote Sugar’s repeated and sizeable market access highlights how large, cash-intensive firms are leaning on commercial paper to manage working capital cycles, refinance short-term obligations, and smooth liquidity pressures. Its dominance also illustrates the confidence investors place in top-tier corporates with strong balance sheets and predictable cash flows.
Beyond Dangote Sugar, issuance was more fragmented across sectors such as financial services, agribusiness, and consumer goods. Johnvents Industries Limited raised about N52.6 billion from its N100 billion programme, while UAC Nigeria Plc issued N45 billion under a N65 billion approval. In the financial sector, Citibank Nigeria Limited, despite holding one of the largest approved programmes at N300 billion, issued only N26.7 billion across two series, signaling restrained utilization even among well-capitalized institutions.
The data also point to a broadening of the issuer base, with fintechs and mid-sized corporates playing a more visible role in the market. Payaza Africa Limited emerged as one of the most active non-industrial issuers, raising nearly N43 billion across three series under a N50 billion programme. Golden Fertilizer Company Limited issued N20 billion from its N40 billion programme, while Skymark Partners Limited raised just over N11 billion despite a similar approval size, reinforcing the view that many firms are issuing strictly to meet near-term working capital needs.
Other contributors, including Champion Breweries Plc, Valency Agro Nigeria Limited, Neveah United Capital Plc, and several special-purpose vehicles, added smaller but steady volumes, collectively deepening market liquidity and reinforcing commercial paper as a mainstream funding option.
Market participants link the surge in CP activity to the broader macroeconomic environment. With the monetary policy rate standing at 27%, commercial bank lending rates remain elevated, often with additional risk and cost margins layered on top. While large corporates with strong credit profiles may negotiate rates closer to base lending levels, smaller or riskier firms typically face significantly higher borrowing costs.
Against this backdrop, commercial paper has emerged as a relatively cheaper and more flexible alternative for short-term funding, particularly for issuers able to attract institutional investors.
Maturity profiles across issuances were largely concentrated between December 2025 and mid-2026, reinforcing the role of CP as a liquidity management tool rather than a substitute for long-term financing. This clustering reflects deliberate balance sheet management, allowing firms to bridge cash flow gaps without committing to the premium costs associated with longer-tenor bank loans.
Analysts note that the large volume of approved but undrawn programmes represents a strong pipeline that could sustain issuance momentum into 2026. If interest rates remain high and access to long-term credit continues to be constrained, more corporates, including those not listed on the Nigerian Exchange, are expected to deepen their reliance on the CP market. In that sense, the cautious utilization seen in 2025 may be less a sign of weak demand and more an indication of increasingly sophisticated treasury strategies in a tight monetary environment.
