Earlier in the week, Dangote Cement Plc announced the successful issuance of its N100 billion Series 1 Fixed Rate Senior Unsecured Bonds. The bond was issued at a coupon rate of 12.5%.
In a statement by the company, the bond issuance was said to have been oversubscribed by a wide range of investors despite the COVID-19 pandemic which has caused uncertainty in the financial markets. Note that some of the investors who subscribed to the Dangote Cement bond include Nigerian pension funds managers, asset managers, insurance companies, banks, and even foreign fund managers. The total book amounted to N155 billion.
The N100 billion Series 1 Fixed Rate Senior Unsecured bonds will be due in April 2025. It is Dangote Cement’s debut bond issuance in the Nigerian debt market and part of a larger N300 billion programme which the company has planned.
The bond issuance was also described as the largest corporate bond ever issued in the Nigerian debt market. Proceeds from the capital raise will be used to refinance the company’s already existing short-term debt which was used to facilitate some cement expansion projects. In the same vein, some of the proceeds will also be used as working capital and to finance general company projects.
While commenting on the successful issuance, the company’s Chief Executive Officer, Michel Puchercos, described it as a landmark transaction. He said:
“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.”