MTN Nigeria to raise new N200 billion debt for network expansion

MTN Nigeria (MTNN) will raise 200 billion naira in new debt, after approaching capital market regulator, the Securities and Exchange Commission, to give the go-ahead for the move, the company said on Tuesday.

It follows the wireless operator’s inaugural bond program for the same amount, launched last year in two tranches of maturities and coupon rateMTNN said in a statement seen by PREMIUM TIMES.

The money from the transaction will help finance capital expenditurein particular the extension of the network, as well as “the management of the working capital and the general object of the company”.

The corporate action signals the second time the local unit of the Johannesburg-based MTN Group has announced its intention to raise funds from the debt market, where it issued N127 billion in commercial paper in April.

“The company will decide on issuances under the second bond issuance program in due course, subject to prevailing market conditions and receipt of relevant regulatory approvals,” MTN said, meaning that it would test the waters for the right time to launch in light of the high-interest rate environment.

Karl Toriola, CEO of MTN Nigeria

Monetary authorities Tuesday traveled Nigeria’s key interest rate hit a three-year high of 14% in a bid to rein in the country’s inflation, now at its highest level in more than half a decade.

This will likely lead to higher yields, but it could make companies like MTN reluctant to take on debt, at least in the short term.

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Still, Damilare Ojo, who heads the research unit at investment bank Meristem Securities, believes now is the time for companies to take on debt as interest rates are set to rise further.

“As things stand, liquidity is quite low, and that’s one of the factors also contributing to the increase in yields coupled with the increase in the monetary policy rate that we just saw today. “, Mr. Ojo told PREMIUM TIMES by telephone.

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“It means the cost of borrowing will continue to rise, and I think it’s just good for anyone, including MTN, to come into the market as soon as possible because it’s very likely that rates will continue to rise. .”

MTN announced in a separate statement on Tuesday that it had been assigned “AAA (NG) and A1+ (NG) domestic long-term and short-term issuer ratings…with a stable outlook.” by Johannesburg-based GCR Ratings.

MTN has the highest credit rating of any company in Nigeria, followed by Dangote Cement.

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