VFD Group opens N20 billion commercial paper offer, yields up to 23.5%

VFD Group Plc has opened a N20 billion Commercial Paper issuance under its N50 billion Commercial Paper Programme. The offer opened on Friday, August 28, 2026, and closes on Friday, September 4, 2026.

Offer details

The issuance is split into two series. Series 2(A) has a 270-day tenor with a discount rate of 18.5498% and an implied yield of 21.50%. Series 2(B) has a 364-day tenor with a discount rate of 19.0383% and an implied yield of 23.50%. Settlement date is September 7, 2026.

The commercial paper has a short-term rating of DataPro A1. Minimum subscription is N5 million, with multiples of N1 million thereafter.

VFD Group is an investment company with interests across financial services, capital markets, technology, real estate, hospitality, media and entertainment, infrastructure and energy. It listed on the NGX on October 6, 2023, and ranks among the 52 most capitalized companies with a market capitalisation of N143 billion.

Yield versus government paper

For a minimum subscription of N5 million, investors in the 270-day series pay about N4.31 million upfront and receive N5 million at maturity, earning a gross return of roughly N686,088. In the 364-day series, investors pay about N4.05 million upfront and earn a gross return of about N949,307.

The implied yield beats government-backed alternatives. At the August 26, 2026 Treasury Bills auction, the 364-day bill cleared at 20.35%. VFD's 364-day CP offers an extra 3.15 percentage points in annualised yield for taking on corporate credit risk.

At the August 27, 2026 CBN OMO auction, stop rates settled at 19.85% for 96 days and 19.32% for 152 days, with a weighted average stop rate of 19.4064%. Unlike Treasury Bills and OMO instruments, commercial papers carry issuer risk, so the higher yield is compensation for that risk.

Can VFD repay?

In H1 2026, VFD's profit after tax doubled to N10.1 billion, while gross earnings rose about 30% to N53.7 billion. Shareholders' funds stood at approximately N124.9 billion, and borrowings were about N133.5 billion, giving a debt-to-equity ratio of roughly 1.1x.

The proposed N20 billion issuance represents about 16% of shareholders' funds and less than 4% of total assets. Cash and financial assets cover more than nine times the proposed CP size, giving VFD a sizeable pool to support repayment.

One concern is financing cost. Operating profit covers finance costs about 1.5 times, so interest expenses remain significant despite improved earnings.

For investors, the offer provides a meaningful yield premium over government paper, but it comes with corporate risk. The key question is whether the extra return is enough for the risk of lending to a private company. VFD's improved earnings and asset base support the case, but the financing cost burden is worth watching.