Conglomerate Press Corporation Limited has become the first company to issue Commercial Paper barely a month after Reserve Bank of Malawi approved that firms in the country can now start to issue the paper, Daily Times has established.

Commercial paper, a private sector equivalent of Treasury Bills, allows private companies to borrow directly from the general public instead of obtaining loans from commercial banks.

“Loita Investment Bank and Press Corporation Limited are pleased to announce that PCL has completed its first Commercial Paper issuance under the K100 million programme that was arranged, structured and placed by Loita Investment Bank,” reads a release from Loita Bank.

The first of its kind in the country, the programme has been approved by both the Malawi Stock Exchange and the Reserve Bank of Malawi.

The programmes have been used worldwide by various corporations to lower their cost of funds and to diversify their investment portfolio and increase their returns. 

Commenting on his company’s issuance of the paper PCL Acting Chief Executive Carl Kindinger said the Commercial Paper programme has effectively reduced the firm’s cost of borrowing by several percent per annum.

“It is a logical sound business decision to pursue such initiatives and we are pleased with the outcome of this first issue,” he said.

Milton Weeks, outgoing Managing Director of Loita Investment Bank said his Bank has been working over several months with the RBM and the MSE to ensure that all regulatory issues are addressed and cooperation obtained.

“It is a testament to both the continued support that Loita Bank has received from these two bodies and the extensive resources capacity that we enjoy in the Group that we have been able to launch the first ever commercial paper programme in the country,” he said.

Apart from arranging and placing the first Commercial Paper programme in Malawi, Weeks said Loita and its parent Loita Capital Partners International have been pioneers in the introduction of new capital market instruments in Malawi, including the successful issues of the PTA Bank Currency Linked Bond, a US$ 20 million note issuance programme.

Thom Mpinganjira, MSE Chief Executive said that commercial paper will give a chance for companies to source cheaper loans on the market while individuals and institutions with extra funds have an opportunity to invest their money at higher interest rates.