Dangote Cement Begins Sale of N50bn Tax-Free Commercial Paper

By Dipo Olowookere

One of the leading cement manufacturing companies in Nigeria, Dangote Cement Plc, has commenced the sale of its commercial paper worth N50 billion.

The debt instrument is being offered for sale under the organisation’s N150 billion commercial paper issuance programme, Business Post reports.

Under this tranche, the cement giant is selling in three different series and subscriptions already opened on Wednesday, November 18, 2021, and will close on Wednesday, November 24, 2021.

According to details of the exercise, the series one is with 90 days maturity while the series two has 180 days tenure, with the series three with 270 days maturity.

Business Post reports that the three-month paper is with a discounted rate of 8.33 per cent, while the six-month paper is 8.62 per cent, with the nine-month paper at 9.31 per cent.

Dangote Cement is selling the commercial paper to investors free and clear of withholding taxes but the minimum subscription is N5 million.

The fresh capital is being sourced by the company through the issuance of tax-free commercial paper to finance its short-term working capital requirements and general corporate purposes.

Dangote Cement is Africa’s leading cement producer, with a combined installed capacity of 48.6Mta across its operations in 10 African countries.

The firm operates a fully integrated quarry-to-customer business with activities covering manufacturing, sales and distribution of cement. It has a strong track record in the Nigerian debt capital markets, having successfully issued both short and long term debt.

Dangote Cement is assigned a AAA long-term rating by GCR and Aa3.ng long-term rating by Moody’s due to its position as one of the largest cement manufacturers in Nigeria and Sub-Saharan Africa.

The company has also consistently reported robust operating and net profit margins compared to its peers in Sub-Saharan Africa and in other jurisdictions. It has adequate working capital, satisfactory cash flow, and a very experienced management team and it is the first Nigerian corporate to receive the AAA issuer rating by GCR.