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Wednesday, March 22, 2023

Coronation Merchant Bank N25bn Commercial Paper Opens for Investors

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Coronation Merchant Bank Limited (Coronation MB) intends to raise up to N25bn via Series XV (180 days) and XVI (268 days) Commercial Paper issuance under its N100bn Commercial Paper Programme.

The firm has indicated that the issue proceeds will be used to finance short term working capital requirements.

The offer opened on April 7th, 2021, and closes April 13th, 2021, with the minimum subscription being N5,000,000.

The implied yield for the series XV is 7.2503%, and that of Series XVI is 9.6368%.

Coronation Merchant Bank (CMB) was incorporated as a private limited liability bank in 1992 and obtained a discount house license from the Central Bank of Nigeria (CBN) in 1993.

Following structural reforms in the Nigerian financial services sector, the company obtained CBN’s license to operate as a merchant bank in 2015.

With a strategic decision to focus on core banking activities, Coronation MB divested from its two former subsidiaries (Coronation Asset management Ltd and Coronation Securities Ltd) in 2019.

The primary activities of the company include trade finance, corporate and investment banking, wealth management, and treasury activities. The majority shareholder of Coronation MB is WAPIC Insurance which holds 22.80 percent of total shares outstanding as at 2020FY.

The 180-day instrument offers a premium of 2.91 percent, when compared to Treasury bill instrument with Days-to-Maturity of 176 days and yield of 4.34 percent, while the 268-day instrument, when compared to Treasury bill with 281 Days-to-Maturity is being offered at a premium of 3.76 percent. ▪

“Given the company’s credit rating [A- (GCR); B- (Fitch); A+ (Augusto)], liquidity position and general performance outlook, we consider the yield of 7.25% and 9.64% on both instruments attractive. Hence, we recommend a BUY on the offer,” Meristem Securities analysts said.

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