Bullished Investors oversubscribe DANGCEM’s N100bln bond

A Dangote Cement Plc logo stands on a barrier at the under-construction Dangote Industries Ltd. oil refinery and fertilizer plant site in the Ibeju Lekki district, outside of Lagos, Nigeria, on Thursday, July 5, 2018. The $10 billion refinery, set to be one of the worlds largest and process 650,000 barrels of crude a day, should be near full capacity by mid-2020, Devakumar Edwin, group executive director at Dangote Industries said in an interview. Photographer: Tom Saater/Bloomberg via Getty Images

Dangote Cement Plc, Africa’s largest cement producer, had announced the successful issuance of N100 billion Series 1 Fixed Rate Senior Unsecured Bonds due April 2025 under the Company’s N300 billion Bond Programme.
The transaction was 1.5 times oversubscribed and represents Dangote Cement’s debut bond issuance in the debt capital markets.
Book building with respect to the issuance commenced on April 3, 2020 following approval from the Securities and Exchange Commission and closed on April 15, 2020 at a coupon rate of 12.50 percent.
Despite current market headwinds due to the COVID-19 pandemic, the transaction was extremely well received and attracted significant demand from a wide range of high-quality investors including domestic pension funds, asset managers, insurance companies, banks and international fund managers. The total order book amounted to N155 billion.
The transaction represents the largest corporate bond issuance in Nigeria’s debt capital markets, reflecting Dangote Cement’s strong credit quality as well as the resilience of the Nigerian debt capital market despite current global challenges.
The transaction enables the Company to lower its average cost of debt and extend the average maturity of its debt. Dangote Cement intends to use the net proceeds of the offering to refinance existing short-term debt previously applied towards cement expansion projects, working capital and general corporate purposes.
The Bonds will be listed on The Nigerian Stock Exchange and the FMDQ Securities Exchange Limited, and for the first time in the history of the Nigerian debt capital markets, investors will have the option of lodging securities with either the Central Securities Clearing System or the FMDQ Depository.
Commenting on the bond issuance, Michel Puchercos, Chief Executive Officer of Dangote Cement, 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.”
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.
Dangote Cement Plc is Sub-Saharan Africa’s largest cement producer with an installed capacity of 45.6Mta capacity across 10 African countries.
The company operates a fully integrated “quarry-to-customer” business with activities covering manufacturing, sales and distribution of cement. We have a production capacity of 29.3Mta in our home market, Nigeria.
Its Obajana plant in Kogi state, Nigeria, is the largest in Africa with 13.3Mta of capacity across four lines; our Ibese plant in Ogun State has four cement lines with a combined installed capacity of 12Mta and our Gboko plant in Benue state has 4Mta.
Through its recent investments, Dangote Cement has eliminated Nigeria’s dependence on imported cement and has transformed the nation into an exporter of cement serving neighboring countries.
In addition, it has operations in Cameroon (1.5Mta clinker grinding), Congo (1.5Mta), Ghana (1.5Mta import), Ethiopia (2.5Mta), Senegal (1.5Mta), Sierra Leone (0.5Mta import), South Africa (2.8Mta), Tanzania (3.0Mta), Zambia (1.5Mta).
Dangote Cement has a long-term credit rating pf AA+ by GCR and Aa2.ng by Moody’s due to its market leading position, significant operational scale and strong financial profile evidenced by the Company’s robust operating and net profit margins relative to regional and global peers, adequate working capital, satisfactory cashflow and low leverage.
Dangote Cement is a subsidiary of Dangote Industries Limited, a diversified and fully integrated conglomerate as well as a leading brand across Africa in businesses such as cement, sugar, salt, pasta, beverages, and real estate, with new multi-billion dollar projects underway in the oil and gas, petrochemical, fertilizer and agricultural sectors.

Iheanyi Nwachukwu

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