Dangote Cement Plc (DANGCEM-NL), has 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 3 April 2020 following approval from the Securities and Exchange Commission and closed on 15 April 2020 at a coupon rate of 12.50 per cent.
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 N=155 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.
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.