I must have skipped this initially.

What I meant was that in recent times the reportage of such deals were not prompt. Some took as much as 2weeks or more...

chimex38:

But why?
Maybe at a later date

Edited:
Just checked, it was disclosed on the board yesterday.
Maybe I don't understand your statement.

For perspective:

The entire MTN commercial paper program is authorized to issue N250 billion of short-term unsecured debt.

MTN's 2023 earnings before interest and taxes was N1,200 billion (4.8x CP). Its market capitalization, even at today's low valuation, is N3,500 billion.

Still worried?

ghm:


I am really worried about having MTN as a long term investment, the way they are issueing commercial papers after IPO/PO is alarming. It means they will meed to fulful all those obligations in the future and may not have funds for growth except by issueing more papers and this will definitely limit the ROI via dividend or appreciation. What do you think?

HesInMe:
For perspective:

The entire MTN commercial paper program is authorized to issue N250 billion of short-term unsecured debt.

MTN's 2023 earnings before interest and taxes was N1,200 billion (4.8x CP). Its market capitalization, even at today's low valuation, is N3,500 billion.

Still worried?

What was their profit after tax.
What is their current shareholders fund/equity.

Feel free to check for yourself. It's on their website. Keep in mind that interest cover is what is important when it comes to debt (profit after tax already has interest deducted from it).

vacanci:


What was their profit after tax.
What is their current shareholders fund/equity.

HesInMe:
For perspective:

The entire MTN commercial paper program is authorized to issue N250 billion of short-term unsecured debt.

MTN's 2023 earnings before interest and taxes was N1,200 billion (4.8x CP). Its market capitalization, even at today's low valuation, is N3,500 billion.

Still worried?

This is someone who claims not to like misleading information, saying we should be our brother's keeper. But is revenue truly the best way to evaluate a company's financial standing, or do things change when discussing a stock you favor? What is their profit after tax? Or, if you want to dig deeper, what is their cash flow to equity holders—the cash that remains after all actual expenses during the period?

You know what I dislike? Hypocrisy.

HesInMe:
Feel free to check for yourself. It's on their website. Keep in mind that interest cover is what is important when it comes to debt (profit after tax already has interest deducted from it).

What interest coverage are you referring to when the equity holders are already in negative territory? Do you realize that if MTNN were to stop operating today, equity holders would get nothing? If MTNN weren’t a limited liability company, equity holders would be required to pay out of their own pockets. Are you aware of this, or is hypocrisy still clouding your judgment?

Raider76:
https://punchng.com/pharcourt-refinery-halts-operations-loading-bay-empty/

Lol

hoMegas:


What's the stock ticker

I like ur profile pic.
Vinsmoke sanji

Na wa. Sounds like Madam didn't give you any last night. Don't take it out on me.

Full disclosure: I don't own any MTNN shares (but I did subscribe to the commercial paper, or CP, offer). The OP expressed concern about MTNN's long-term prospects because of their CP issuance. I provided context showing that the CP program is actually very small for a company of MTN's size. In particular, the entire CP program (not just the interest on the CP) is a small fraction of MTN's earnings before interest.

[And honestly, with respect, anyone who's really worried about CP doesn't know anything about finance. CP is unsecured lending -- the lowest of the lowest when it comes to debt. Lower than accounts payables, bank loans and bonds. If MTN goes out of business, they can literally tell CP holders to jump into the Niger.]

If you're worried about MTN stock, it's not the CP program that should be giving you indigestion. It's their FX exposure, still-high valuation, and slowing growth.

ositadima1:


This is someone who claims not to like misleading information, saying we should be our brother's keeper. But is revenue truly the best way to evaluate a company's financial standing, or do things change when discussing a stock you favor? What is their profit after tax? Or, if you want to dig deeper, what is their cash flow to equity holders—the cash that remains after all actual expenses during the period?

You know what I dislike? Hypocrisy.

HesInMe:
Na wa. Sounds like Madam didn't give you any last night. Don't take it out on me.

Full disclosure: I don't own any MTNN shares (but I did subscribe to the commercial paper, or CP, offer). The OP expressed concern about MTNN's long-term prospects because of their CP issuance. I provided context showing that the CP program is actually very small for a company of MTN's size. In particular, the entire CP program (not just the interest on the CP) is a small fraction of MTN's earnings before interest.

[And honestly, with respect, anyone who's really worried about CP doesn't know anything about finance. CP is unsecured lending -- the lowest of the lowest when it comes to debt. Lower than accounts payables, bank loans and bonds. If MTN goes out of business, they can literally tell CP holders to jump into the Niger.]

If you're worried about MTN stock, it's not the CP program that should be giving you indigestion. It's their FX exposure, still-high valuation, and slowing growth.

I don’t get your point here. The person wasn’t asking about the commercial paper itself but about its effect on MTNN stock investors. Then you started talking about revenue. Are you sure you read the post before replying?

HesInMe:
If MTN goes out of business, they can literally tell CP holders to jump into the Niger.]

If you're worried about MTN stock, it's not the CP program that should be giving you indigestion. It's their FX exposure, still-high valuation, and slowing growth.

That is not what CP being unsecured mean. You still need to learn.

It means that they instrument can be called before end of tenure. You are not guaranteed to hold the rate till maturity. As per telling holders to jump to the Niger after subscribing to the commercial paper, this is a fat lie reels with massive ignorance.

KarlTom:
I must have skipped this initially.

What I meant was that in recent times the reportage of such deals were not prompt. Some took as much as 2weeks or more...

OK. understood

.

Sigh. Respectfully, this is incorrect. Unsecured lending means the loan is not backed (or 'secured') by collateral (like buildings, cell phone towers, etc.). You're on your own if the business cannot pay back the loan.

vacanci:


That is not what CP being unsecured mean. You still need to learn.

It means that they instrument can be called before end of tenure. You are not guaranteed to hold the rate till maturity. As per telling holders to jump to the Niger after subscribing to the commercial paper, this is a fat lie reels of massive ignorance.

LOL. I tried to treat you with respect but you're just showing your nyansh.

I said nothing about revenue. Earnings before interest and taxes is not the same as revenue. It is actually a metric used to calculate interest coverage, which is relevant to the CP.

Here's what I did say about the stock, since you only do selective reading:

"If you're worried about MTN stock, it's not the CP program that should be giving you indigestion. It's their FX exposure, still-high valuation, and slowing growth."

Oya, continue arguing with yourself. Na empty vessel wey dey loud pass.

ositadima1:


I don’t get your point here. The person wasn’t asking about the commercial paper itself but about its effect on MTNN stock investors. Then you started talking about revenue. Are you sure you read the post before replying?

vacanci:


That is not what CP being unsecured mean. You still need to learn.

It means that they instrument can be called before end of tenure. You are not guaranteed to hold the rate till maturity. As per telling holders to jump to the Niger after subscribing to the commercial paper, this is a fat lie reels with massive ignorance.

You are wrong. The unsecured means your money fit enter voice mail if the company fails to redeem the debt.That means it comes with risk unlike the federal government investment which comes with no risk of default. If na naira debt the government can print naira to pay.If na dollars they can raise via any means including forward contract on crude etc.This is why of recent the pension regulators said they should stop investing pension fund in such instruments. I will not buy any CP of comes in big problems like mtn,sugar ellah,japaul. You can consider CP of companies like NAHCO,saplet,aradel and many good companies whose shareholders fund are not negative. If village people they follow you,you fit go buy oando CP.The best for all this CP by this companies is to recapitalise via shareholders. Though it will lead to dilution but it is better at the long run than all this high double figure on CP.

HesInMe:
LOL. I tried to treat you with respect but you're just showing your nyansh.

I said nothing about revenue. Earnings before interest and taxes is not the same as revenue. It is actually a metric used to calculate interest coverage, which is relevant to the CP.

Here's what I did say about the stock, since you only do selective reading:

"If you're worried about MTN stock, it's not the CP program that should be giving you indigestion. It's their FX exposure, still-high valuation, and slowing growth."

Oya, continue arguing with yourself. Na empty vessel wey dey loud pass.

First, the operating profit or profit before tax and interest was never the ₦1.2 trillion you quoted, not in 2022 nor in 2023. If you insist otherwise, take a screenshot and share it here.

Second, on countless occasions, you have failed to address the real question. Since they are into negative territory, the question was whether increasing debt will further worsen the situation for shareholders.

But I suppose, as the all-knowing vessel of wisdom that you are, you already knew this.

Streetinvestor2:
You are wrong. The unsecured means your money fit enter voice mail if the company fails to redeem the debt.That means it comes with risk unlike the federal government investment which comes with no risk of default. If na naira debt the government can print naira to pay.If na dollars they can raise via any means including forward contract on crude etc.This is why of recent the pension regulators said they should stop investing pension fund in such instruments. I will not buy any CP of comes in big problems like mtn,sugar ellah,japaul. You can consider CP of companies like NAHCO,saplet,aradel and many good companies whose shareholders fund are not negative. If village people they follow you,you fit go buy oando CP.The best for all this CP by this companies is to recapitalise via shareholders. Though it will lead to dilution but it is better at the long run than all this high double figure on CP.

CP being unsecured means it has a CALL FEATURE. It also has underwriting feature. This is where FMDQ comes in.

If for example you buy a CP at 30% interest. If half way through the tenor, MPR rates have dropped significantly, the issuer of the unsecured instrument can call it and pay everyone by prorating. This will enable them access the market for cheaper loan.

The defaults painted are over exaggerated, I will like to have a history of defaulted CP programmed in Nigeria since mungo Park

You think if it's just the way you make it sound, subscribers will go close. What is the regulations Carrie out by SEC and CBN.

Guy/gal, if you don't believe us, Google am na. Loan security is a well described thing. We're not reinventing this wheel.

vacanci:


CP being unsecured means it has a CALL FEATURE. It also has underwriting feature. This is where FMDQ comes in.

If for example you buy a CP at 30% interest. If half way through the tenor, MPR rates have dropped significantly, the issuer of the unsecured instrument can call it and pay everyone by prorating. This will enable them access the market for cheaper loan.

Raider76:
https://punchng.com/pharcourt-refinery-halts-operations-loading-bay-empty/

Sometimes when people talk, they are accused of wishing the gobernment fails.
There were talks about the refinery selling olf stock and denials and accusations were the answer from the government and its people. Now this. They should stop taki g Nigerians for granted.

Ositadimma,

So you don't know where to find the MTN financials, but you're arguing about CP like Angel Michael is denying you entry at Heaven's gate? You're my brother o. Let's bury the cutlass na.

People misunderstand this MTN negative-equity headline. The underlying business is still great, absent the short-term FX losses. How many businesses do you know that generate N500+ billion in free cash flow in 9 months?

ositadima1:


First, the operating profit or profit before tax and interest was never the ₦1.2 trillion you quoted, not in 2022 nor in 2023. If you insist otherwise, take a screenshot and share it here.

Second, on countless occasions, you have failed to address the real question. Since they are into negative territory, the question was whether increasing debt will further worsen the situation for shareholders.

But I suppose, as the all-knowing vessel of wisdom that you are, you already knew this.

HesInMe:
For perspective:

The entire MTN commercial paper program is authorized to issue N250 billion of short-term unsecured debt.

MTN's 2023 earnings before interest and taxes was N1,200 billion (4.8x CP). Its market capitalization, even at today's low valuation, is N3,500 billion.

Still worried?

Did you consider other bank loans, overdraft and foreign currency debts.

I think total debt should not exceed 2.5 times of EBIT, we can consider 3 times of EBIT as worst case scenario

Good point. I did not, and I agree it looks worse. But even if you do, it helps to put things in perspective:

In 2023, total liabilities (everything they owe) were ~3,300 billion (it has increased in 2024 sha)
Net cash from operations (this is cash, so no Oando-like accounting gimmicks) was ~996 billion

So, if MTN wanted to, they could pay off every single dime they owe in about 4 years (3300/996) without raising any capital -- just from the cash their business generates. Every single dime. That's astonishing.

There's a reason the market cap is still 3.5 trillion, despite all the "negative shareholder equity" headlines. Investors are not stupid. People worried about 250 billion in CP don't understand this business.

emmanuelewumi:



Did you consider other bank loans, overdraft and foreign currency debts.

I think total debt should not exceed 2.5 times of EBIT, we can consider 3 times of EBIT as worst case scenario

🍿

https://x.com/nnpclimited/status/1861496561328410627?t=1JmjxphS8Rtr4Tq4hM-UwA&s=19

HesInMe:
I honestly don't get why people are buying bank shares today sha. Yes, the lending rate has increased due to CBN, so their interest margin is up. But the only likely direction of lending rates over the medium term is down, not up. After all, all these banks have all this cash chasing limited high-quality lending and investment opportunities, and the easy FX round-tripping is no longer an attractive option.

Meanwhile, the number of shares outstanding has gone up dramatically following the recapitalization. Earnings per share (EPS) and dividend per share will down big time, making their shares ridiculously expensive on a price-to-earnings (or price to dividends) basis. What am I missing?

Thank you for this easily understandable bear case for the banks

Does NSEMPA have a WhatsApp group dedicated to only members of NSEMPA?

It's like Ositadinma1 has met his match. I am enjoying the conversation

Pesuzok:
It's like Ositadinma1 has met his match. I am enjoying the conversation

I Don't think there's need for this writing....

Mfunkynation:

I Don't think there's need for this writing....

There's need Bro!
Osita is too aggressive at times for no good reason

HesInMe:
Good point. I did not, and I agree it looks worse. But even if you do, it helps to put things in perspective:

In 2023, total liabilities (everything they owe) were ~3,300 billion (it has increased in 2024 sha)
Net cash from operations (this is cash, so no Oando-like accounting gimmicks) was ~996 billion

So, if MTN wanted to, they could pay off every single dime they owe in about 4 years (3300/996) without raising any capital -- just from the cash their business generates. Every single dime. That's astonishing.

There's a reason the market cap is still 3.5 trillion, despite all the "negative shareholder equity" headlines. Investors are not stupid. People worried about 250 billion in CP don't understand this business.

Hope finance cost is not more than 20% of EBIT