Activity in the domestic debt market increased as companies continued to take advantage of relatively low market yields for financing, in addition to other activities such as business expansion.
Dangote Industries Limited has looked in this direction by deepening the Nigerian debt market by successfully issuing a Series 1 bond issue of N187 billion, which is the largest corporate bond ever issued in Nigerian capital market history.
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The debt market, bond market, fixed-income market, or credit market is the collective name given to all trades and issues of debt securities.
Governments typically issue bonds in order to raise capital to pay down debts or fund infrastructural improvements.
Publicly traded companies issue bonds when they need to finance business expansion projects or maintain ongoing operations..
A bond functions as a loan between an investor and a corporation.
The investor agrees to give the corporation a certain amount of money for a specific period of time. In exchange, the investor receives periodic interest payments. When the bond reaches its maturity date, the company repays the investor.
The bond issuance includes 7-year Tranche A bond and 10-year Tranche B bond.
The 7-year Tranche A bond is priced at 12.75% and the 10-year Tranche B bond is priced at 13.50%.
The bond issuance attracts participation from a wide range of institutional investors, including pension funds and asset managers, backed by an AA+ rating from GCR and an AA rating (ngr) from Fitch.
Dangote Industries is one of the leading, diversified and fully integrated conglomerate with operations in Nigeria and Africa across a wide range of industries, including cement, sugar, salt, condiments, packaging, energy, fertilizer and petrochemicals.
Its core business focus is to provide local, value-added products and services that meet the ‘basic needs’ of the African populace through the construction and operation of large-scale manufacturing facilities in Nigeria and across Africa.
DIL is focused on building local manufacturing capacity to generate employment, reduce capital flight from Africa and increase local value additions.
The Group has 11 distinct business lines, with the cement, sugar and salt business currently contributing majority of the group earnings.
These subsidiaries are industry leading players with strong brand values, underpinned by long operational track record, diverse customer base, ongoing investments in capacity expansion and control over their respective value chains.
DIL also has two project companies, Dangote Oil Refinery Company Limited (DORC) and Dangote Fertilizer Limited (DFL), located at the Lekki Free Zone in Lagos State, who (together with DIL) will serve as co-obligors on the Offer.
DORC is a 650,000 barrels per day (b/pd) integrated crude oil refinery and petrochemical plant, which is expected to be Africa’s largest oil refinery, while DFL is expected to be Africa’s largest granulated urea fertilizer manufacturing facility, with a production capacity of up to 2.8 Mtpa.
