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Bonds & Fixed Income | |
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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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