Surge in Nigeria’s Commercial Paper Issuance as Companies Seek Short-Term Funding

The Nigerian market for short-term corporate debt has seen significant growth this year, with the Securities and Exchange Commission (SEC) reporting that more than 753 billion naira ($519 million) was raised through commercial paper issuances between April and October. This represents a substantial increase from the 763.4 billion naira raised in the same period last year. The surge in issuances highlights the growing reliance of companies on commercial paper as a means to quickly raise funds.

Commercial paper is a form of short-term, unsecured debt that companies use to meet their immediate funding needs. These instruments typically have maturities of less than 270 days. The SEC attributes the strong performance of the commercial paper market to improved market liquidity, sustained investor interest, and increased confidence in recent reforms.

Emomotimi Agama, the Director General of the SEC, emphasized that the commercial paper market is one of the most dynamic segments, providing crucial support for short-term funding requirements in key sectors such as manufacturing, agriculture, and energy. This growth in the commercial paper market has contributed to an all-time high total capitalization of Nigeria’s capital market, nearing 150 trillion naira.

In addition to commercial paper, the SEC highlighted the significant transactions in Nigeria’s bond market in 2025, including a 500-billion-naira climate finance vehicle and a 200-billion-naira bond issuance by Elektron Finance. These deals underscore the rising investor interest in infrastructure development and sustainable finance options.

The positive momentum in Nigeria’s financial markets is further supported by a favorable macroeconomic environment, highlighted by the country’s credit rating upgrade and removal from the Financial Action Task Force’s “grey list.” Despite some volatility experienced in November, attributed to profit-taking, uncertainties regarding a proposed capital gains tax increase, and external factors, the market has shown signs of recovery, buoyed by policy clarifications.

The SEC mentioned reforms in the settlement cycle, recently reduced from T+3 to T+2, aimed at enhancing market liquidity and risk mitigation. Further reductions are planned, with a long-term goal of achieving T+1 or real-time settlement. These initiatives are expected to further strengthen Nigeria’s capital market infrastructure and bolster investor confidence in the market.