19 June 2020
Absa Capital Markets Nigeria Limited (“Absa”), acting as joint lead issuing house, has successfully completed Dangote Cement PLC’s (“Dangote Cement”) debut Series 1 bond offering, allocating NGN 100 billion in 5-year fixed-rate senior unsecured bonds under its NGN 300 billion issuance programme.
Dangote Cement will use the proceeds of this term bond offering to refinance existing short-term debt as well as for working capital and general corporate purposes. Absa acted as a lead issuing house for the registration of the programme as well as joint lead issuing house for the arrangement of the bond. The issuance is the largest corporate bond ever priced in the history of the Nigerian debt capital market.
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.”
“Again, the bond issuance was a landmark deal given the turbulent market caused by the sharp fall in oil prices and the impact of the novel coronavirus which resulted in lockdowns being imposed in the states of Lagos, Abuja and Ogun which lasted the duration of the book-build period,” says Feyi Olusanya, Managing Director, Absa Capital Markets Nigeria Limited.
Despite the lockdown, investors held virtual credit committee meetings and bidding in the book was done while navigating working from home during the lockdown period.
“These challenges were also overcome by holding the bidding period open for longer than average, active investor engagement, a well-informed arranging consortium and the positive perception of Dangote Cement in the capital markets. Notwithstanding a tumultuous market backdrop, a milestone deal was achieved. The deal ultimately priced within guidance at 12.50% with the final book garnering just over NGN 155 billion and was 1.5 times over-subscribed,” Olusanya says.
“The success of the bond issuance demonstrates Absa’s expertise in providing tailor-made debt and capital raising solutions for its corporate clients in Nigeria and across the African continent,” says Kumeshen Naidoo, Head of Debt Capital Markets at Absa Corporate and Investment Banking.
Absa in Nigeria has in the past few years recorded many landmark transactions: several large upstream oil and gas syndications; international bond offerings for Nigerian issuers; the largest ever IPO on the NSE and advising on some of the most noteworthy M&A transactions in the market.
Absa established a representative office in Nigeria with the aim of gradually building a corporate and investment banking business to serve its growing Nigerian client base as well as Pan-African and global clients looking to do business in Nigeria. Absa’s presence in the market has now expanded to include investment banking and markets businesses.
“Absa is optimistic about the long term economic prospects of Nigeria, and is committed to expanding our business and supporting the needs of our clients. Across the last few years in Nigeria we have had the privilege to advise on several noteworthy advisory, capital markets and financings,” says Hasnen Varawalla, Managing Director, Investment Banking at Absa Group.