GCR in its notice, affirmed the long-term and short-term national scale issuer ratings of AA+ (NG) and A1+(NG) respectively, assigned to Dangote Cement Plc, as well as with the outlook accorded as Stable. In addition, the cement firm’s N100 billion (US$262.12m) Series 1 Fixed Rate Bond has been assigned AA+.
This rating signifies that Dangote Cement’s credit profile and liquidity is very strong, with low risk of default. The rating accorded to Dangote Cement is an investment-grade rating, signifying that it is an attractive investment vehicle.
“Dangote Cement has shown great resilience in 2020 despite the COVID-19 pandemic and a challenging environment. The Group continues to report strong cash generation while maintaining strong financial discipline. As Africa’s leading cement producer, we are committed to maximising shareholder value creation,” Michel Puchercos, Chief Executive Officer, said on the rating.
It should be recalled that Dangote Cement in 2020 announced the successful issuance of 100 billion Series 1 Fixed Rate Senior Unsecured Bonds due April 2025 under the Company’s 300 billion Bond Programme. The transaction was 1.5 times oversubscribed and represents Dangote Cement’s debut bond issuance in the debt capital markets.
Book building with respect to the issuance commenced on 3 April 2020 following approval from the Securities and Exchange Commission and closed on 15 April 2020 at a coupon rate of 12.50 percent.
Despite 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 total order book amounted to 155 billion.
The transaction represents the largest corporate bond issuance in Nigeria’s debt capital markets (as at time of issue), reflecting Dangote Cement’s strong credit quality as well as the resilience of the Nigerian debt capital market despite current global challenges.
The transaction enabled the Company to lower its average cost of debt and extend the average maturity of its debt. Dangote Cement intends to use the net proceeds of the offering to refinance existing short-term debt previously applied towards cement expansion projects, working capital and general corporate purposes.
GCR a founder member of Europe based ARC Ratings, is licensed as a rating agency in a number of markets, including Kenya with the Capital Markets Authority, Nigeria with the Securities and Exchange Commission, Zimbabwe with the Reserve Bank of Zimbabwe and Mauritius with the Financial Services Commission.
GCR has since established itself as the leading rating agency in Africa, accounting for the majority of all ratings accorded on the African continent.
Dangote Cement is Africa’s leading cement producer with nearly 48.6Mta capacity across Africa. A fully integrated quarry-to-customer producer, with a production capacity of 32.25Mta in the home market, Nigeria.
The Obajana plant in Kogi state, Nigeria, is the largest in Africa with 16.25Mta of capacity across five lines; Ibese plant in Ogun State has four cement lines with a combined installed capacity of 12Mta and our Gboko plant in Benue state has 4Mta.
In addition, there are 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) and Zambia (1.5Mt).