FMDQ Admits N16.79bn UACN Property Commercial Paper

ABUJA (Sundiata Post) – The FMDQ OTC Securities Exchange (“FMDQ” or “the Exchange”) has admitted the UACN Property Development Company (UPDC) PLC N16.79 billion Commercial Paper (UPDC CP) admitted for quotation on the platform.
According to information on the FMDQ website, this is another notable stride in FMDQ’s drive to create a vibrant and successful CP market, as the UPDC CP became the fifth CP admitted for quotation following the release of its rules.
The transaction, which was part of UPDC’s  N24 billion listed commercial papers programme, was oversubscribed by 67.9 per cent, amounting to N6.79 billion over the sum of N10 billion initially targeted by the issuer – UPDC.
Speaking at the quotation ceremony held in Lagos on Monday, Managing Director/CEO, FMDQ, Mr. Bola Onadele Koko, said the quotation was evidence of the positive progression in the Nigerian commercial paper market, serving to instill confidence in the possibilities of the Nigerian financial market.
He stated that FMDQ, as the market organiser, desirous of building a sustainable CP market in the Nigerian financial market space, promotes credibility for quoted CPs, through a highly efficient registration process and the provision of invaluable information, instituting financial market infrastructure, in line with global standards, to drive, among others, transparency, governance, market oversight, integrity and market liquidity with a view to protecting stakeholder interests.
In executing this landmark transaction, Coronation Merchant Bank Limited (formerly Associated Discount House Limited) acted as Joint Lead Arranger, Dealer, Issuing, Calculating and Paying Agent to the transaction having structured, marketed, distributed and facilitated the FMDQ listing of the commercial paper.
As a wholesale financial institution with the capacity to provide innovative financial solutions and lend its robust distribution platform to its clients, this transaction has again affirmed Coronation Merchant Bank’s status as the go-to institution for investment banking services.
To enhance the commercial paper offering, Coronation Merchant Bank jointly provided a liquidity back-stop facility alongside the partial corporate guarantee provided by the UAC of Nigeria Plc (“UPDC’s parent company”). Coronation Merchant Bank’s collaboration in provision of backstop facility is the first of its kind in Nigeria and the Bank’s ingenuity boosted the investment grade of the commercial paper to A- despite its issuer’s Bb- Agusto rating.
The transaction was priced at a discount rate of 10.34 per cent and an effective yield of 11.00 per cent on the 18th of April 2016. Being a 183-day tenor instrument the commercial papers will mature on the 18th of October 2016. As a result of the attractiveness of the pricing to both UPDC and investors at the date of issuance, which created a win-win situation for the parties in the transaction, UPDC was able to lower its financing cost by c.500 bps which meant increased value for shareholders while investors got superior returns on their investment as the deal was priced 150bps above treasury of similar tenor.
Inspired by its aspiration of becoming Africa’s Premier Investment Bank, Coronation Merchant Bank is already demonstrating industry leadership in responsible business practices.  The Bank is one of the latest entrants into the Merchant Banking space and offers investment banking, corporate banking, private banking/wealth management and global markets/treasury services to its diverse clients. It also offers securities trading/brokerage, asset management and trustees services via its subsidiaries; Coronation Securities Limited; Coronation Asset Management Limited; and Coronation Nominees and Trustee Limited respectively. It has two branches located in Abuja and Port Harcourt, and its Head Office is in Lagos.
Coronation Merchant Bank predicates its operations on an enterprise risk management framework and a conservative but highly responsive portfolio management philosophy. This strategy, laced with a guarded risk attitude and strong risk-bearing capacity, is fast transforming the bank into one-stop shop for financial services.

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