Coronation Merchant Bank Limited (Formerly Associated Discount House Limited) has completed the issuance of a N16.79 billion senior unsecured FMDQ-listed commercial paper for UACN Property Development Company Plc (“UPDC”).

The transaction, which was part of UPDC’s   N24 billion listed commercial papers programme, was oversubscribed by 67.9%, amounting to N6.79 billion over the sum of N10 billion initially targeted by the issuer – UPDC.

In executing this landmark transaction, Coronation Merchant Bank acted as Joint Lead Arranger, Dealer, Issuing, Calculating and Paying Agent to the transaction having structured, marketed, distributed and facilitated the FMDQ listing of the commercial paper.

To enhance the commercial paper offering, Coronation Merchant Bank jointly provided a liquidity back-stop facility alongside the partial corporate guarantee provided by the UAC of Nigeria Plc (“UPDC’s parent company”). Coronation Merchant Bank’s collaboration in provision of backstop facility is the first of its kind in Nigeria and the Bank’s ingenuity boosted the investment grade of the commercial paper to A- despite its issuer’s Bb- Agusto rating.

The transaction was priced at a discount rate of 10.34% and an effective yield of 11.00% on the 18th of April 2016. Being a 183-day tenor instrument the commercial papers will mature on the 18th of October 2016.

As a result of the attractiveness of the pricing to both UPDC and investors at the date of issuance, it created a win-win situation for the parties in the transaction; UPDC was able to lower its financing cost by c.500 bps which meant increased value for shareholders while investors got superior returns on their investment as the deal was priced 150bps above treasury of similar tenor.