The Nigerian commercial paper (CP) market recorded a significant increase in activity in July 2026, as its value quoted on the FMDQ Securities Exchange rose by 244.41 per cent to N126.71 billion, from N36.79 billion recorded the previous month.

The increase represents an additional N89.92 billion in CPs quoted during the month indicating stronger corporate borrowing activity and growing borrowing activity and growing demand for short-term funding through the fixed-income market.

Latest data from the exchange showed that the agriculture sector led issuance activity during the review period, with four CPs accounting for 44.4 per cent of the total number of commercial papers quoted in July 2026.

Operators said this was an indication of the increasing use of the commercial paper market by businesses within the real sector to raise short-term funds for working capital, production, inventory and other operational requirements as businesses continue to explore alternatives to conventional bank financing amid elevated borrowing costs and the need for more flexible sources of short-term liquidity.

They noted that companies are increasingly turning to the CP market to bridge short-term financing gaps, manage cash flows and support working-capital requirements, particularly as bank borrowing remains relatively expensive. Commercial papers are short-term debt instruments issued by companies to raise funds, usually for working capital and other immediate financing needs.

The instruments provide corporate borrowers with access to the capital market while offering investors opportunities to earn returns over relatively short investment periods.

Beyond the increase in new quotations, the data also showed that the total outstanding value of commercial papers also increased during the month.

The outstanding value rose by 5.18 per cent, or N24.11 billion month-on-month, to N489.45 billion.

According to the exchange, the increase in outstanding CPs was driven by higher quotations during the review period, despite commercial paper maturities valued at N102.61 billion.

Commenting on the development, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the rise in commercial paper activity could be linked largely to the high cost of bank financing and the prevailing monetary policy environment.

He said many corporate organisations were looking for better borrowing windows because the cost of funding from commercial banks had become increasingly prohibitive.

According to him, while the current monetary policy environment has benefits for the economy, it also comes with costs for businesses, particularly in terms of the cost and availability of credit.

He noted that the increased reliance on commercial papers was therefore a response by companies to the funding challenges created by the prevailing monetary policy regime, adding that investors also appeared to be increasingly comfortable with commercial paper instruments compared with conventional bank lending.

Yusuf attributed the development largely to interest rate and monetary policy considerations, noting that companies were exploring alternative funding channels to manage the pressure created by elevated borrowing costs.