GCR rating boost Dangote Cement’s N300bn bond
By Kayode Tokede
Global Credit Ratings (GCR) has awarded Dangote Cement Plc its highest ratings with a reconfirmation of the stability of the outlook of Nigeria’s largest quoted company and Africa’s largest cement producer.
In its latest ratings report, GCR upgraded the long term issuer rating of Dangote Cement to AAA (NG), and affirmed the short term issuer rating of A1+(NG), with outlook accorded as Stable.Also, GCR upgraded the long term issue rating of AAA (NG) accorded to Dangote Cement’s existing N100 billion Series 1 Fixed Rate Bond, and assigned an indicative rating of AAA (NG) to its proposed N300 billion Series 1 (Tranche A – C) Bond.
Dangote Cement’s existing N100 billion Series 1 Fixed Rate Bond is the only corporate bond at AAA rating in Nigeria. AAA ratings are issued to investment-grade debt that has the highest level of creditworthiness with the strongest capacity to repay investors.
Dangote Cement has submitted application to the Securities and Exchange Commission (SEC) seeking to register a N300 billion bond issuance programme. After obtaining regulatory approvals, the company plans to issue medium to long-term debts under the N300 billion bond issuance programme. The bond issuances will however depend on the prevailing market conditions.
GCR stated that the ratings upgrade was underpinned by Dangote Cement’s strong competitive position as Africa’s leading integrated cement manufacturer, evidenced by very strong earnings, robust cash flows and moderate gearing metrics. The issuer ratings and the existing bond rating will expire in November 2021, while the proposed Series 1 (Tranche A – C) Bond rating is valid until May 2021.
Chief Executive Officer, Dangote Cement Plc, Michel Puchercos said it was delightful to be the first ever Nigerian corporate, and one of the very few in Africa, to receive the AAA issuer rating by Global Credit Ratings.
He noted that Dangote Cement has been able to maintain its strong competitive position, despite the challenging and volatile environment in 2020 owing to the COVID-19 pandemic.
“The AAA rating, which is the highest rating issued by Global Credit Rating, affirms our resilient financial position and high creditworthiness. We continue to report strong cash generation and remain committed to maximising shareholder value creation,” Puchercos said.
He outlined that the upgrade also supported Dangote Cement’s continuous effort to champion the deployment of international best practices in term of shareholders and debtholders’ engagement and information.
He pointed out that being the first Nigerian company listed on the Nigerian Stock Exchange’s Premium Board to release a combined annual and sustainability report confirms to its stakeholders Dangote Cement’s commitment to maximise long term value creation while embracing global standards.
According to the plan, Dangote Cement will use the net proceeds from the proposed N300 billion debt issuances to finance capital expenditure mainly around its expansion projects as well as refinancing of short-term debt and working capital.
The new N300 billion debt capital raising signifies the commitment of the cement group to continuous balance sheet restructuring after it floated its maiden debut bond of N100 billion in 2020. The maiden bond issue was fully subscribed, making history as the largest single corporate bond issue in the Nigerian capital market.
Dangote Cement also raised N50 billion in additional short-term debt capital through issuance of commercial papers (CPs). Dangote Cement offered Series 15 and 16 under its N150 billion commercial paper (CP) issuance programme.
Dangote Cement is Africa’s leading cement producer with nearly 46Mta capacity across Africa. it is a fully integrated quarry-to-customer producer, with a production capacity of 29.25Mta in its home market, Nigeria. Obajana plant in Kogi state, Nigeria, is the largest in Africa with 13.25Mta of capacity across four lines; Ibese plant in Ogun State has four cement lines with a combined installed capacity of 12Mta and Gboko plant in Benue state has 4Mta.
In addition, Dangote Cement 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).
