UAC of Nigeria Plc (UACN) has launched a N45 billion Commercial Paper (CP) issuance under its N65 billion CP Issuance Programme, marking another strategic move by one of Nigeria’s oldest conglomerates to tap the domestic debt market for short-term funding.
The offer, which opened on October 16, 2025, will close on October 20, 2025, with settlement scheduled for October 21, 2025.
The issuance comprises two series — a 182-day note and a 268-day note — offering investors effective yields of 18.5% and 19.5%, respectively. UACN is targeting Qualified Institutional Investors and High Net-worth Individuals, in compliance with the Securities and Exchange Commission’s Rule 321 governing commercial paper issuance in Nigeria.
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Breakdown of the Offer
The Series 1 CP (182 days) is issued at a 16.94% discount rate, translating to an 18.50% effective yield, and will mature on April 21, 2026. The Series 2 CP (268 days) carries a 17.06% discount rate with a 19.50% effective yield. Investors can participate with a minimum subscription of N10 million, and thereafter in multiples of N1,000.
According to the company, repayment of the notes will be funded from UACN Group’s operating cash flows, underscoring its capacity to meet short-term obligations. The company’s net operating cash flow stood at N10.84 billion in H1 2025, a significant rise from N6.91 billion recorded for the full year 2024. As of June 2025, UACN reported N53.17 billion in retained earnings, supported by a five-year profit compound annual growth rate (CAGR) of 43% and cumulative operating cash flows exceeding N6 billion.
The notes may be quoted on the FMDQ Exchange platform or another recognized exchange to provide investors with secondary market liquidity, a growing consideration for institutions seeking flexibility in Nigeria’s high-yield debt market.
The issuance comes at a time when corporates are increasingly turning to the commercial paper market to meet liquidity needs amid tight credit conditions and rising domestic borrowing costs. UACN’s CP aims to give investors an opportunity for moderate real returns while diversifying away from sovereign instruments by offering yields slightly above inflation and Treasury bill rates.
With Nigeria’s headline inflation rate at 18.02% as of September 2025, the CP’s yields offer a modest 2–3 percentage point premium over recent Treasury Bill stop rates, which ranged between 15% and 15.77%. Analysts say the pricing reflects both market realities and UACN’s strong credit profile, allowing the company to attract institutional liquidity without excessive cost of funds.
The commercial paper market remains one of the few efficient avenues for corporates to raise short-term capital without overreliance on bank loans.
Understanding the Yields
Commercial papers are issued at a discount and redeemed at par value upon maturity. The discount rate represents the markdown applied to the face value at issuance, while the effective yield captures the actual annualized return an investor earns at maturity, factoring in the shorter tenor of the note.
For instance, an 18.5% effective yield over 182 days translates to a more competitive annualized gain than a similar Treasury Bill of the same duration, offering investors a slightly better hedge against inflation and currency volatility.
Strong Credit Profile
The UACN CP is rated A- by Agusto & Co. and A by DataPro, affirming the conglomerate’s good credit quality and moderate risk of default. These ratings reflect the group’s strong brand recognition, diversified portfolio across key sectors — including food and beverages, real estate, paints, and logistics — and an adequate liquidity buffer.
The company has, in recent years, streamlined its operations, divesting non-core assets and optimizing working capital to enhance profitability. Its improved cash generation in 2025, despite macroeconomic headwinds, strengthens investor confidence in its short-term obligations.
Inflation and Real Return Considerations
While the effective yield of up to 19.5% appears attractive, the real return above inflation remains limited, especially given the sustained upward pressure on consumer prices. However, compared with government securities, which continue to see oversubscription at lower yields, the UACN CP presents a moderate yield advantage.
In addition, corporate papers typically appeal to investors seeking to diversify portfolio risk, as they carry corporate credit exposure rather than sovereign risk. UACN’s proven earnings stability and liquidity strength make it a favorable choice within this segment.
Liquidity and Market Accessibility
Another key attraction for investors is the CP’s potential listing on the FMDQ Exchange, which enhances tradability and liquidity. This provides flexibility for institutions that may wish to sell before maturity, a crucial factor in Nigeria’s tight liquidity environment.
The minimum entry requirement of N10 million also underscores that the offer is tailored toward institutional players and high-net-worth individuals, rather than retail investors. The relatively short tenors — six and nine months — offer a balance between yield and liquidity, making the paper suitable for treasury management by pension funds, asset managers, and corporates.
The issuance is part of UACN’s broader funding strategy aimed at strengthening working capital, supporting operations, and refinancing short-term obligations at competitive market rates. The successful launch of the N45 billion tranche also signals investor confidence in the group’s financial stability and market standing.
Given its solid retained earnings, improved operating cash flow, and conservative leverage levels, analysts expect UACN to maintain a strong liquidity position even as it continues to fund strategic business growth.
Looking ahead, Nigeria’s corporate debt market has remained resilient despite inflationary pressures, offering firms like UACN a viable platform to raise affordable capital. As macroeconomic conditions gradually stabilize and inflation edges closer to single digits, yields may normalize, but for now, high-grade corporates are benefiting from investor appetite for safe, short-term, fixed-income instruments.
