United Nigeria Airlines has raised ₦22 billion in an oversubscribed debut commercial paper issuance, signalling growing market optimism about the airline’s financial performance and expansion strategy. The fundraising represents the successful first tranche of its ₦100 billion commercial paper programme. It also marks a significant milestone for Nigeria’s aviation financing landscape.
The airline exceeded its initial ₦20 billion target following strong investor demand. However, it limited the additional subscription to 10 per cent of the target, bringing the final issuance to ₦22 billion. The company subsequently returned the remaining excess subscriptions to investors whose applications could not be fully accommodated.
The response highlights market optimism surrounding the airline’s business model, financial position and growth prospects. It also demonstrates the appetite among institutional and private investors for opportunities within Nigeria’s aviation industry.
Market Optimism Drives United Nigeria’s ₦22bn Fundraising
Commenting on the development, Managing Director of United Nigeria Airlines, Mazi Osita Okonkwo, described the strong subscription as an endorsement of the company’s business model and financial performance.
“The level of demand we received is a clear endorsement of our business model, and financial performance as well as the confidence the market has in our growth plans. The proceeds will support fleet expansion and operations. We are grateful to the investors who participated and we look forward to more active engagement with investors as we continue with our CP and other capital market programmes,” Okonkwo said.
The proceeds are expected to support the airline’s working capital requirements, fleet expansion and operational activities. These priorities come as the carrier pursues opportunities to strengthen its domestic network and increase its international presence.
The commercial paper programme was structured in two series, with tenors of 270 days and 364 days. The issuance also received investment-grade credit ratings from two rating agencies.
Agusto & Co. assigned the programme short-term and long-term ratings of A3 and BBB-, respectively, with a stable outlook. Meanwhile, DataPro assigned short-term and long-term ratings of A1 and BBB, respectively.
The ratings provide investors with an independent assessment of the issuer’s credit profile. They also formed part of the transaction’s credit credentials.
Meristem Highlights Strong Investor Demand
Managing Director of Meristem Capital Limited, Rasaki Salawu, confirmed the successful transaction and described the issuance as a milestone for Nigeria’s aviation sector.
Meristem Capital Limited served as Lead Issuing House for the registration of United Nigeria Airlines’ ₦100 billion commercial paper programme. It also coordinated the debut issuance under Series 1 and 2, working alongside Cordros Capital and other dealers.
Salawu said the transaction attracted investors across different categories, including asset managers, insurance companies and high-net-worth individuals.
He described it as the first commercial paper issuance by an airline in Nigeria. According to him, investor demand exceeded the initial target by more than ₦5 billion.
Despite the excess demand, the airline maintained its decision to increase the issuance by no more than 10 per cent, bringing the final amount to ₦22 billion.
Salawu said the decision demonstrated financial prudence and discipline in managing the fundraising exercise. He added that the debut transaction would contribute meaningfully to the airline’s growth objectives.
The successful issuance could also strengthen market optimism about alternative financing opportunities for aviation businesses. It provides a potential funding route beyond traditional borrowing and other conventional financing arrangements.
Airline Targets Wider Regional and International Reach
United Nigeria Airlines currently serves 14 destinations across Nigeria and Ghana. The carrier is also finalising plans to expand its regional footprint and has approvals to operate as a flag carrier to six international destinations.
Beyond network expansion, the airline has continued strengthening its international distribution and operational credentials.
These agreements give travel agents worldwide access to the airline’s ticket inventory. They also create opportunities for wider distribution and international commercial partnerships.
The successful ₦22 billion fundraising therefore comes at an important stage in the airline’s development. With fleet expansion, operational growth and international connectivity among its priorities, the transaction provides additional financial support for its ambitions.
For Nigeria’s aviation industry, the debut issuance also offers a notable example of how capital market instruments can support airline financing. The strong subscription provides further evidence of market optimism about United Nigeria Airlines and its growth prospects.
