With interest rates still elevated in late 2025, Nigerian investors looking for short-term, high-yield opportunities are increasingly turning to commercial paper (CP)—a corporate-issued, fixed-income instrument that has outperformed most Treasury Bills (NTBs) and money-market alternatives this year. As inflation gradually cools and monetary conditions begin shifting, CPs have emerged as one of the few investment options still offering positive real returns, making them especially appealing to risk-conscious investors seeking strong yields without sacrificing liquidity.
How Much N5 Million Currently Earns in Commercial Paper
Using the November 2025 CP programmes issued by Dangote Cement and Daraju Industries, a N5 million placement would generate the following returns:
181 days @ 16.10% (Dangote Cement)
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Gross interest: N399,191.78
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Net interest after 10% withholding tax: N359,272.60
265 days @ 16.70% (Dangote Cement)
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Gross interest: N606,232.88
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Net interest: N545,609.59
364 days @ 18.38% (Daraju Industries)
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Gross interest: N916,482.19
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Net interest: N824,833.97
These returns are significantly higher than the yields available on many competing instruments. Corporates continue to issue CPs at elevated discount rates due to Nigeria’s tight monetary environment, where borrowing costs remain high. With analysts expecting the Central Bank of Nigeria (CBN) to begin monetary easing in 2026, locking in a CP now—especially with tenors between 270 and 364 days—allows investors to secure today’s high yields before rates potentially decline.
Comparing CP Returns with Treasury Bills
Treasury Bills remain a staple for conservative investors, but their yields currently lag behind top CP offerings. Using the latest NTB auction rates:
182 days @ 15.50%
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Gross interest: N387,500.00
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Net interest after 10% WHT: N348,750.00
(CPs outperform by about N11,691)
364 days @ 17.50%
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Gross interest: N875,000.00
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Net interest: N787,500.00
(CPs outperform by roughly N41,482)
Importantly, NTBs—previously exempt from withholding tax—are now subject to a 10% WHT on interest, following a Federal Inland Revenue Service (FIRS) directive issued in October 2025. This reduces their competitive advantage and reinforces why investors must now compare net-of-tax returns, not gross yields.
How Returns Compare with Stocks
If an investor had placed N5 million in a stable, high-performing equity—such as Zenith Bank—six months ago and the stock appreciated by 16.10%, the gain would be N805,000, about double the 181-day CP return.
However, equities carry price volatility. A 16% gain can just as easily become a 16% loss. CPs, though unsecured, are more predictable as long as the issuer maintains strong credit quality.
For investors prioritizing stability, predictable cash flows, and short tenors, CPs offer a balanced blend of yield and risk control.
Recent CP Issuances Offering Attractive Rates in 2025
The Nigerian debt capital market witnessed several notable CP issuances in November–December 2025:
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HillCrest Agro-Allied (closes 16 Dec)
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182-day: 19.42% (discount), 21.50% yield
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364-day: 19.69% (discount), 24.50% yield
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Mecure Industries (closes 12 Dec)
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269-day: 18.18% (discount), 21% yield
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GLNG Funding SPV (closed 5 Dec)
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179-day: 18.21% (discount), 20% yield
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270-day: 18.92% (discount), 22% yield
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Daraju Industries (closed 26 Nov)
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270-day: 18.55% (discount), 21.50% yield
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364-day: 18.38% (discount), 22.50% yield
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Dangote Cement (closed 19 Nov)
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181-day: 16.10% (discount), 17.50% yield
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265-day: 16.70% (discount), 19.05% yield
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A N5 million investment meets the minimum subscription for many CPs and grants access to attractive yields across multiple sectors.
Why CPs Are Attractive Right Now
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High interest rate environment: Yields remain well above traditional bank deposits.
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Short maturities: Tenors of 90–364 days allow fast reinvestment cycles.
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Lower entry thresholds via fintech platforms: Retail investors can participate with as little as N100,000.
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Strong issuer participation: Corporates across FMCG, manufacturing, agriculture, and energy continue to issue CPs aggressively.
Key Considerations Before Investing in CPs
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Ensure the CP programme is SEC-registered and listed on FMDQ.
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Review independent credit ratings from Agusto, GCR, or DataPro.
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Be aware that many CPs lack secondary-market liquidity.
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Assess the issuer’s financial health—CPs are unsecured obligations.
How to Invest N5 Million in CPs
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Open an investment account with a licensed broker or issuing house.
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Monitor CP offerings via FMDQ, brokers, or issuers.
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Conduct due diligence on the issuer’s creditworthiness.
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Choose a tenor aligned with your cash-flow needs.
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Subscribe at the discounted price and fund the investment.
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Hold to maturity or trade on the secondary market where liquidity exists.
Emmanuel Bassey is a Financial Expert that has worked in the Banking and Finance Industry for over 15+ years across different banks in Nigeria
