Nigeria’s largest quoted company and Sub-Saharan Africa’s largest cement company, Dangote Cement Plc, on Tuesday completed the book building and allotment of its N100 billion debut bond issuance.
This made it the largest single corporate bond issue in the capital market.
The first series under the company’s N300 billion shelf bond issuance programme came on the heels of success of Dangote Cement’s N150 billion Commercial Paper (CP) issuance programme.
Application for the Dangote Cement’s N100 billion Series 1 five-year Fixed Rate Senior Unsecured Bonds, which started on April 3, 2020, closed on Tuesday. and the allotment was subsequently done. The settlement date is on Friday. Minimum subscription was N10 million or 10,000 units at N1, 000 per unit while additional subscriptions were in multiples of N1,000 thereafter. While the bond will be redeemed at the end of its five-year tenor, it will pay fixed coupon twice a year. The indicative coupon range for the book building was between 12.25 per cent and 12.50 per cent.
Dangote Cement plans to use the net proceeds of the bond to refinance existing short-term debt previously applied towards cement expansion projects, working capital and general corporate purposes.
The N100 billion bond is expected to be listed on the Nigerian Stock Exchange (NSE) and FMDQ Securities Exchange, paving way for investors to trade on the corporate bond at the secondary market. The listing of the Dangote Cement’s debut bond will further deepen the Nigerian debt capital market, which had seen large-cap issuers like Access Bank Plc, United Bank for Africa, Lafarge Africa and Flour Mills of Nigeria among others.
With more than N530 billion outstanding corporate debt issues and some N400 billion outstanding sub-national bonds, the debt capital market is increasingly becoming a viable source of long-term funding for both corporates and state governments. Dangote Cement’s N100 billion bond is expected to take the outstanding non-sovereign bonds to the psychological N1 trillion mark.
With the success of large-cap issuance like Dangote Cement’s N100 billion, many analysts said the medium to long-term impact of active issuances and trading on the secondary debt market would further open up long-term debt capital to small and medium companies.