Dangote Cement Plc on Thursday announced the successful issuance of its N100 billion Series 1 fixed rate senior unsecured bonds due April 2025.
Michel Puchercos, Chief Executive Officer of the company, said in Lagos that the N100 billion bonds under its N300 billion bond programme were 1.5 times oversubscribed.
Puchercos said book building with respect to the issuance commenced on April 3, following the approval of the Securities and Exchange Commission, and closed on April 15 at a coupon rate of 12.50 per cent.
He stated that the total order book amounted to N155 billion, noting that the landmark transaction was the largest ever bond issuance by a corporate organisation in Nigeria.
He said in a statement: “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 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.”
According to Puchercos, the transaction would enable the company to lower its average cost of debt and extend the average maturity of its debt.
He stated that the net proceeds of the offer would be used to refinance existing short-term debt previously applied towards cement expansion projects, working capital and general corporate purposes.
It said: “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.”
Puchercos said the bonds would be listed on the Nigerian Stock Exchange and the FMDQ Securities Exchange.
He explained that for the first time in the history of the Nigerian debt capital markets, investors would have the option of lodging securities with either the Central Securities Clearing System or the FMDQ Depository.
The News Agency of Nigeria reports that Stanbic IBTC Capital acted as the Lead Issuing House for the Series 1 Bonds.