By Dipo Olowookere
The N100 billion bond issuance by Dangote Cement Plc has been oversubscribed by investors, a statement from the cement maker said on Thursday.
The papers were sold under the N300 billion bond programme of the largest cement producer in Africa. The exercise received subscriptions worth N155 billion.
The N100 billion notes were the first tranche of the fixed rate senior unsecured bonds maturing in April 2025.
The debut bond issuance of the company in the debt capital market were sold at a coupon rate of 12.50 percent.
Proceeds from the sale would be used to refinance existing short-term debt previously applied towards cement expansion projects, working capital and general corporate purposes.
Business Post gathered that offers were received from a wide range of high-quality investors including domestic pension funds, asset managers, insurance companies, banks and international fund managers despite the current market headwinds due to the COVID-19 pandemic.
The transaction was the largest corporate bond issuance in Nigeria’s debt capital market, reflecting Dangote Cement’s strong credit quality as well as the resilience of the nation’s debt capital market.
The exercise allowed the firm to lower its average cost of debt and extend the average maturity of its debt.
According to the Chief Executive Officer of Dangote Cement, Mr Michel Puchercos, “This landmark transaction is the largest ever bond issuance by a corporate issuer in Nigeria.
“It allows us to further broaden our sources of funding by accessing long-term debt at competitive costs from the capital market and builds further on the success of our domestic commercial paper programme.
“The success of this transaction, in the current challenging environment, illustrates investors’ continuous confidence in Dangote Cement’s strategy, strong cash generation and solid credit profile.”
Stanbic IBTC Capital acted as the Lead Issuing House for the Series 1 Bonds, and Absa Capital Markets Nigeria, Standard Chartered Capital & Advisory Nigeria, United Capital, Coronation Merchant Bank, Ecobank Development Corporation Nigeria, FCMB Capital Markets, FBNQuest Merchant Bank, Rand Merchant Bank, Quantum Zenith Capital, Futureview Financial Services and Vetiva Capital Management acted as Joint Issuing Houses.
The bonds will be listed on the Nigerian Stock Exchange (NSE) and the FMDQ Securities Exchange Limited, and for the first time in the history of the Nigerian debt capital market, investors will have the option of lodging securities with either the Central Securities Clearing System or the FMDQ Depository.
Adedapo Adesanya