The appetite for short-term debt is hitting a fever pitch as companies aggressively utilise the Commercial Paper (CP) market.
Companies turn to Commercial Paper as a cheaper alternative to traditional bank loans for increased working capital.
Commercial paper issuances climbed to N143.19 billion in February, a 165 percent increase from N53.96 billion in January, according to the February 2026 Credit Market Report by WealthBridge Market Intelligence.
Companies that led CP market activity in February….
Coleman Industries led activity in the commercial paper market, raising N50 billion through its Series 5 and 6 issuances. UAC of Nigeria followed with N41.24 billion raised across two issuances, while JohnVents Industries secured N38.91 billion through multiple series.
Other issuers included Skymark Partners, NGN Gram Limited and Accion Microfinance Bank, which collectively raised smaller amounts during the month as firms across sectors sought short-term funding from the market.
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February also saw the launch of a structured private credit instrument, with ARM raising N25 billion through its Private Debt Fund Series 1.
Corporate borrowing in Nigeria rose in February as companies tapped the short-term debt market while investors poured trillions of naira into government securities, signalling strong liquidity in the financial system and positioning ahead of a potential decline in interest rates.
It signals broader liquidity expansion…
“Nigeria’s capital markets are currently exhibiting a configuration that, at first glance, resembles the early stages of a classic easing cycle,” WealthBridge Market Intelligence said in the report.
They explained that the pattern seen across credit markets does not indicate investors are exiting fixed income assets, but reflects broader liquidity conditions in the financial system.
“What we are observing is broader liquidity expansion, under policy anchoring,” the report said.
The increase in borrowing comes after the Central Bank of Nigeria reduced the Monetary Policy Rate by 50 basis points to 26.5 percent at its February meeting, a move that signalled growing confidence that inflation pressures are moderating and that the aggressive tightening seen in the previous year may be easing.
Companies are taking advantage of this opportunity in the credit market to secure funding while borrowing costs remain relatively attractive.
The debut signals growing interest in alternative funding structures beyond traditional bank and bond market channels.
While this new private fund offered investors an additional funding avenue within the credit market, the traditional anchor of the financial system, government debt, continued to attract strong demand. Total Treasury bill subscriptions reached N4.59 trillion in February, compared with N4.98 trillion in January, highlighting deep liquidity within the fixed-income market.
Demand was particularly concentrated in the one-year instrument as investors attempted to lock in yields before policy easing potentially pushes rates lower.
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The 364-day Treasury bill attracted N4.40 trillion in bids against an offer of N800 billion, representing an oversubscription rate of nearly 450 percent.
“If this were a true rotation into equities, one would expect demand erosion in sovereign auctions and upward pressure on stop rates. Instead, sovereign demand remains resilient even as yields compress,” WealthBridge Market Intelligence said.
The coexistence of strong demand for both sovereign and corporate debt suggests liquidity is entering the system rather than simply shifting between asset classes.
“The evidence suggests incremental liquidity is entering the system, rather than migrating between asset classes,” the WealthBridge Market Intelligence report stated.
That liquidity is already filtering through to borrowers. Commercial paper spreads have tightened, issuance volumes have recovered, and funding windows have improved.
Still, analysts caution that borrowing conditions remain far from loose. Policy rates remain elevated, and regulatory constraints, such as the cash reserve ratio, continue to shape lending across the banking system.
For companies, the current environment presents an opportunity to raise capital while investor appetite remains strong.
For investors, however, expectations of a sharp fall in yields may be premature. The report describes the current phase as a measured expansion in liquidity, not the beginning of a deep easing cycle.
Read also: Investors still bet big on T-bills post-MPC rate cut
Core reasons companies issue Commercial Paper…
Lower Interest Costs: For companies with high credit ratings, issuing CP is typically cheaper than taking out a commercial bank loan. By bypassing the bank (disintermediation), the company pays interest directly to investors.
Working Capital Support: It is the go-to instrument for funding day-to-day operations, such as purchasing inventory, covering accounts payable, or meeting payroll during seasonal gaps.
Speed and Flexibility: Unlike long-term bonds or complex bank syndications, CP can be issued quickly to take advantage of sudden market liquidity—just as we saw in February 2026.
Unsecured Nature: CP is generally unsecured, meaning companies don’t have to pledge specific assets (like land or machinery) as collateral, providing them with greater operational freedom.
Bridge Financing: Companies often issue CP as “bridge” money to cover immediate expenses while they wait for long-term funding or a major revenue inflow to materialise.
Chioma Nwangwu
Chioma Nwangwu is a Tax Reporter at BusinessDay, covering Nigeria’s tax policies, regulatory reforms, and compliance trends. She reports on how evolving tax rules impact businesses, investors, and the economy, translating complex fiscal regulations into clear, actionable insights.
