CBN interest hike stops companies from borrowing as corporate bond issuance dips 24.90% in 2022

Nigerian businesses concerned about rising interest rates and macro-economic issues have halted borrowings from the bond market

According to data from Afrinvest Securities, there were 13 corporate bond issuances with a total value of N170.80 billion in 2022, which is 24.90 percent lower than 2021’s N227.50 billion in 10 issuances.

The biggest issuances were Geregu Power (N40.10 billion), Presco, (N34.50 billion), and LFZC (N25.0 billion).

In 2022, the Central Bank of Nigeria increased the monetary rate four times to fight inflation which rose to 21.47% in November 2022.

Read also:CBN says Nigeria to become cashless by 2025

The last interest rate was increased by 100 bps to 16.5% at its November 2022 meeting.

These decisions made many companies skeptical about issuing bonds for expansion for fear of paying more than budgeted.

Afrinvest Securities also reported that the average corporate bond yield rose to 14.60 % from 12.10 percent.

While average commercial papers rose to 15.10% from 11.25%.

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