Nigerian Breweries Plc is seeking to raise up to N15bn in the first and second series of its N100bn commercial paper programme to support its short-term funding requirements. The company is offering 11.59 per cent and 14.43 per cent yield on its 90- and 182-day commercial paper. According to Afrinvest, the offer for the series 1 and 2 commercial papers, which opened on Thursday, will last for a week and close on Thursday, April 18, while the settlement date will be April 23. The Series 1 commercial paper has a tenor of 90 days, an effective yield of 11.59 per cent and a discount rate of 11.268 per cent. The Series 2 commercial paper has a tenor of 182 days, an effective yield of 14.43 per cent and a discount of 13.46 per cent. The commercial papers, which were awarded Aa rating by Agusto & Co Limited and AA rating by Global Credit Ratings Co, have a minimum subscription amount of N5m and in multiples of N1,000 thereafter. UNDERSTANDING COMMERCIAL PAPER Commercial Paper issuances by corporates have been on the rise so far in 2018 as companies\u00a0finance expensive debt amidst a much lower interest rate environment. Treasury yields have averaged 12.4% in 2018 vs. 2017 average of 17.9%. In simple terms, companies borrow money from the public by issuing commercial papers. It is essentially an unconditional promise to pay back your money on an agreed future date with interest. The offer includes all the details of the transaction. You may be wondering why a company would approach the investing public for the loan rather than go to a bank. One advantage is the lower interest rate. Commercial papers are issued within the range of rates obtainable in the money market. That means you get to borrow at a rate cheaper than borrowing from the bank. This makes it cheaper to run their operations. For taking this risk, you also get an attractive return on your money. Commercial Paper issuance can serve as a preamble to any future bond offering by the issuer. Balance sheet efficiency creates greater potential funding capacity for the issuer. Issuance of Commercial Paper helps a company complement its other sources of working capital while diversifying its funding sources to include non-bank investors. It also enables companies to acquire investments that are tradable without a penalty.