Most published CP rate data in Nigeria is either fragmented across market commentary, months out of date, or quoted without tax implications, leaving investors and corporate treasurers making return comparisons on incorrect figures.
This article gives you current commercial paper discount rates by tenor, what those rates become net of the 10% withholding tax, and a direct comparison with Treasury Bills and bank fixed deposits, in one place.
What Nigerian Commercial Paper Rates Actually Look Like Right Now
The FMDQ average CP discount rate in 2025 was approximately 22.38%, up from 21.69% in 2024, though rates by individual issuer and tenor vary meaningfully.
The table below shows approximate rate ranges based on recent FMDQ market data.
| Tenor | Higher-rated issuers (AAA/AA) | Mid-tier issuers (A+/A/A-) |
| 90 days | 19% – 21% | 22% – 24% |
| 180 days | 20% – 22% | 23% – 25% |
| 270 days | 21% – 23% | 24% – 26% |
Active issuers in 2025 included MTN Nigeria, Access Bank, Stanbic IBTC Bank, Fidson Healthcare, FSDH Merchant Bank, First City Monument Bank, C&I Leasing, and Addosser Microfinance Bank, illustrating the range of sectors and credit profiles in the market. Credit ratings are assigned by Agusto & Co., GCR (Global Credit Rating), and DataPro.
One distinction worth noting before reading any rate table: the discount rate is not the same as effective yield. A 90-day CP issued at a 22% discount rate means the investor buys the instrument at a discount and receives face value at maturity. The effective annualized yield is slightly higher than the stated discount rate because interest is received upfront and can be reinvested. Most market commentary uses these terms interchangeably, which can overstate or understate returns depending on how the figure is interpreted.
How Withholding Tax Reduces What You Actually Earn
Every published CP rate you will find in the Nigerian market is a gross figure. The 10% withholding tax on CP interest income under the WHT Regulations 2024, enforced from January 2025, reduces that number before it reaches you.
The calculation is direct. A CP quoted at a gross rate of 22% yields approximately 19.8% net after WHT. At 25% gross, you receive approximately 22.5% net.
| Gross CP Rate | Net Rate After 10% WHT |
| 19% | 17.1% |
| 22% | 19.8% |
| 25% | 22.5% |
This matters for every return comparison you make. If you are evaluating a CP against a Treasury Bill or a bank fixed deposit, the rate that belongs in that comparison is the net-of-WHT number, not the headline rate.
One instrument that does not carry this adjustment is the FGN bond. Federal government bonds remain WHT-exempt, which affects the real yield gap between CPs and government securities when building a fixed-income allocation.
How CP Yields Compare to T-Bills and Bank Fixed Deposits
After WHT, Nigerian CPs still offer a meaningful premium over the main alternatives.
| Instrument | Approximate Rate | WHT Applies? | Net Yield |
| Commercial paper (mid-tier issuer, 180-day) | 23% – 25% | Yes (10%) | 20.7% – 22.5% |
| Treasury Bills (recent stop rates) | 15% – 15.77% | Yes (10%) | 13.5% – 14.2% |
| Bank fixed deposits | 10% – 18% | Yes (10%) | 9% – 16.2% |
A recent UAC Nigeria CP issuance offered up to 19.5% effective yield at a time when T-Bill stop rates were running at 15% to 15.77%. The spread is real, but it exists for a reason.
CP investors carry two risks that T-Bill investors do not. First, issuer credit risk: a Treasury Bill is backed by the Federal Government of Nigeria; a CP is backed by the issuing company. Second, liquidity risk: most CPs are held to maturity, and while FMDQ-quoted instruments offer theoretical tradability, real-world secondary market exits before maturity are limited for most investors. The yield premium compensates for both.
The timing dimension adds weight to the decision. The CBN cut MPR by 50bps in Q1 2026. If CP discount rates track monetary policy downward, investors holding lower-yield instruments today are missing a window that narrows with each rate cut.
What Rate Should Corporate Issuers Expect to Pay?
Corporate issuers can expect their CP discount rate to be determined primarily by their credit rating tier, with higher-rated companies paying materially less.
Based on recent FMDQ market activity, approximate issuer-side rate ranges by rating tier look like this: AAA/AA-rated issuers are pricing CPs in the 19% to 22% range; A+/A/A- rated issuers are typically seeing 22% to 26%. Companies without a recognized credit rating from Agusto & Co., GCR, or DataPro will generally find the market inaccessible, since a rating is a prerequisite for FMDQ quotation.
The process for accessing the CP market requires SEC approval, engagement with a licensed Issuing House to structure the programme, and FMDQ quotation before the instrument can be offered to institutional and retail investors. The Issuing House manages the regulatory filing, credit rating coordination, and investor book-building. A company new to the CP market should budget several weeks for this process before a first issuance can close.
The case for evaluating the CP option is strong. The Nigerian CP market reached N1.58 trillion in value in the first seven months of 2025 alone, a 107% year-on-year increase. Companies already issuing CPs are refinancing working capital at rates well below the 25% to 35% that many bank lending facilities carry. Each quarter a qualifying company delays this evaluation is a quarter of paying higher borrowing costs.
How CBN Monetary Policy Is Likely to Move CP Rates in 2026
The direction of commercial paper rates in Nigeria tracks the CBN rate cycle closely, and the current cycle is easing.
During the 2023 to 2024 tightening period, average CP discount rates climbed from approximately 16.4% in 2023 to approximately 27% by 2024. The subsequent easing brought rates down to an average of 22.38% in 2025. With the CBN having made its first MPR cut in Q1 2026 and analyst consensus pointing to further reductions through 2026, the direction of travel is downward.
For investors, this means current rates are likely near a cyclical high point relative to where they may settle by late 2026. For corporate issuers, the same logic applies in reverse: companies that delay CP issuance into a lower-rate environment will access cheaper financing, but they will also be doing so against a backdrop of tighter spreads over bank lending, reducing the relative advantage. Both audiences have a reason to act on current market conditions rather than waiting for more favourable ones that may, in fact, be less favourable.
What This Means for Your Decision
Nigerian commercial paper rates offer a real yield premium over Treasury Bills and bank deposits, but only if you are working from net-of-WHT figures and current FMDQ data. The gross rate cited in most market commentary overstates what will be received.
The window at current rates is likely to narrow as CBN easing continues through 2026. Making comparisons from accurate numbers now is the practical first step.
Lukefield Finance Company Limited is a CBN-licensed finance company offering investment products to individual and corporate clients in Nigeria.
If you have questions about how commercial papers fit into your portfolio, reach out to the advisory team.
Frequently Asked Questions
What is the current commercial paper rate in Nigeria?
The FMDQ average CP discount rate in 2025 was approximately 22.38%. By tenor, rates generally range from around 19% to 23% for higher-rated issuers and 22% to 26% for mid-tier issuers across 90-day to 270-day instruments. These are gross figures before WHT.
How does withholding tax affect my CP return?
The FIRS applies a 10% withholding tax on CP interest income under the WHT Regulations 2024, effective from January 2025. A CP quoted at 22% gross yields approximately 19.8% net after WHT. Always use the net figure when comparing CP returns to other instruments.
Are commercial papers safer than Treasury Bills?
No. Treasury Bills carry the credit backing of the Federal Government of Nigeria. Commercial papers carry issuer credit risk and offer limited secondary market liquidity. FMDQ-quoted CPs can theoretically be traded before maturity, but real exit options are limited. The yield premium over T-Bills exists precisely to compensate investors for these differences.
How do I invest in commercial papers in Nigeria?
Access is through a licensed stockbroker, asset management firm, or investment platform with access to FMDQ-quoted instruments. You cannot purchase CPs directly from issuers as a retail investor. Your intermediary will show you what is currently available by issuer, tenor, and rate, and handle the transaction on your behalf.