The Nigerian Exchange Limited (NGX) has launched a listing segment for commercial papers in a move targeting improved trading in corporate debt in the country’s fixed income market.
Until the introduction of the listing category, transactions in commercial papers, which are short-term debt instruments issued by companies to raise funds from the public, were dominantly conducted on the FMDQ Exchange and NASD OTC Exchange, where most of those securities are quoted.
The new listing window has gained the approval of the market regulator, the Securities and Exchange Commission, and directly offers issuers and companies a platform to list and trade in both conventional and non-conventional commercial papers, the NGX noted in a statement on Wednesday.
Investors desiring to bet on short-term corporate debt on the exchange can now do so with commercial papers, which often mature within 270 days and are redeemable at face value.
“The introduction of Commercial Paper listings is a pivotal step in our strategy to position NGX as a comprehensive capital-markets infrastructure that accelerates capital formation across Africa,” said Temi Popoola, the CEO of the Nigerian Exchange Plc.
He further remarked that sustainable growth, increased market resilience and a strategic hunt for opportunities remain the priority of the exchange in its quest for a technology-enabled and inclusive market.
The NGX is evolving into a multi-asset exchange that admits a broad range of securities, beyond traditional financial assets like stocks, bonds and exchange-traded funds (ETFs), which it has been known for until recent years.
In April 2022, it inaugurated West Africa’s first exchange-traded derivatives market with seven derivative contracts for a start in a bid to diversify its products.
Adding commercial papers the mix will further broaden the offerings of the bourse, whose equity, bond and ETF market capitalisation stood at N92.6 trillion, N51.2 trillion and N41.1 trillion as of Tuesday.
“This platform enhances transparency in the debt market and supports corporates seeking efficient access to funding outside traditional banking channels, while offering investors credible short-term investment options,” Jude Chiemeka, the CEO of NGX.
“NGX will continue to engage with corporates, intermediaries, and investors to deepen liquidity and participation in Nigeria’s debt capital market,” he added.
