Friday, May 17,
2019 / 3:30PM / By FBNQuest Merchant Bank
Commercial papers (CPs) remain a very viable source of alternative funding for medium-large corporations who require capital to meet short-term financial obligations. The reality, however, is that not many organisations are properly equipped with information on how they can access this unique debt instrument; the process is not as complicated as one might imagine, but certain key requirements should be met.
Here’s what Organisations need to do:
1. Get a credit rating
This is important to check the integrity and long-term success of your firm. This rating will highlight the financial performance over the last three years of your organisation, your credit exposure, and history of payment default if any. Once this is asserted, your organisation is just one step closer to accessing Commercial Papers.
2. You must have good corporate governance
This means that there must be a clear management structure within your organization. Investors would not put monies in a firm where the Board of Directors, as well as the processes within the corporation are not clearly defined. So put together a proper corporate governance structure.
3. Audited financial statements
You also need to have prepared financial statements for the last three years at a minimum, and the financial statements will have been audited by a reputable accounting firm.
4. You need professional Advisory
With issuing Houses like FBNQuest Merchant Bank, the process of accessing Commercial Papers becomes even more seamless. The procedure is completely managed on your behalf and your Commercial Paper offer will be made known to eligible investors. The merchant bank may also handle repayment to investors on maturity of the CP. Such merchant banks, are also in a position to provide rating advisory to firms interested in issuing CPs, coordinate regulatory engagement, draft all transaction documents and market the CPs to investors. This is why professional advisory is very important.
For more information on how your company can raise capital though Commercial Papers visit FBNQuest Merchant Bank
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