Dangote Cement Awaits Favourable Market Conditions to Sell Fresh Bonds
By Dipo Olowookere
The board of Dangote Cement Plc is considering selling bonds to investors in the nation’s capital market anytime soon.
However, the major reason for the delay is the right market conditions, according to a statement issued by the leading cement marker on Wednesday.
Dangote Cement launched a N300 billion bond issuance programme about two years ago and last year, it offered N100 billion for sale but received subscriptions worth N155 billion.
The N100 billion notes were the first tranche of the fixed-rate senior unsecured bonds maturing in April 2025, attracting the attention of a wide range of high-quality investors including domestic pension funds, asset managers, insurance companies, banks and international funds managers.
Apparently, due to the success of the first tranche of the exercise, the cement giant is considering sourcing more funds from the local market to fund its expansion projects and others.
In the notice issued yesterday, the firm said it has already “obtained approval from its board of directors to access the capital markets for medium to long-term debt funding.”
However, the size of the second tranche was not stated in the disclosure, though there are indications that the company may request almost or higher than the amount raised in the first tranche.
In the statement, Dangote Cement, however, emphasised that, “The bonds will be issued imminently, subject to favourable market conditions.”
Already, the company has received the “relevant approvals,” including the Securities and Exchange Commission (SEC) in respect of the bonds.
“The company’s management has disclosed that the proceeds of the bonds will be applied towards funding expansion projects, refinance existing short-term debt and for general corporate purposes,” the notice said.
Dangote Cement Plc is Nigeria’s largest company by market capitalisation and the largest cement producer in Sub Saharan Africa with an installed capacity of 45.6Mta across operations in 10 African countries.
It has consistently reported robust operating and net profit margins compared to its peers in the region and in other jurisdictions. The company has adequate working capital, satisfactory cash flow, and a very experienced management team.