…As Dangote Cement N100bn bond debuts

By Nkiruka Nnorom

The Central Securities Clearing System (CSCS) has said it is well-positioned to clear and settle all secondary market transactions on debit notes, going forward, notwithstanding the Exchange where it is traded.

The assurance is coming ahead of the debut of Dangote Cement N100 billion bonds issue in the debt capital market.

With the issue, Dangote Cement Plc is set to join other issuers like Access Bank Plc, United Bank for Africa (UBA) Plc, Lafarge Africa Plc, Flour Mills of Nigeria (FMN) Plc among other large corporations that have mobilized long term debt financing in the Nigerian debt capital market.

Also read: Stanbic IBTC reaffirms commitment to growth of Nigeria’s debt capital markets

The bond is Series 1 of the company’s N300 billion Shelf programme.

The book-building process for the 5-year fixed-rate senior unsecured bonds, which commenced on Friday, April 3, 2020, is to set to close today, Tuesday, April 14, 2020, with the settlement date being Friday, April 17, 2020.

The offer is open to both retail and institutional investors through any of the Joint Lead Arrangers, with a minimum investment of N10 million (10,000 units at N1,000/unit) and multiples of N1,000. The Bond will be redeemed at maturity of 5 years but pays semi-annual coupon.

“Beyond the impact of the Dangote Cement debit transaction on the primary market, the size and the strong investment grade rating of the Dangote Cement bond should enhance its secondary market liquidity, particularly as it is expected to be listed on both the Nigerian Stock Exchange and FMDQ Exchange.

“With CSCS having full coverage of the market, it is well-positioned to clear and settle all secondary market transactions on the debit notes, going forward, notwithstanding the Exchange, where it is traded. With over N530 billion outstanding corporate debt issues and slightly less than N400 billion outstanding sub-national bonds, the Nigerian debt capital market is increasingly becoming a viable source of long-term funding for both corporates and state governments,” said Mr Haruna Jalo-Waziri, Managing Director/CEO, CSCS.

“With this debut N100 billion debt note, Dangote Cement Plc is once again reinforcing the capacity of the Nigerian debt capital market and setting a new benchmark in terms of size and pricing of corporate bonds.

“ CSCS, being the depository to about half a trillion-naira outstanding corporate bonds from twenty-three issuers, we are excited to onboard Dangote Cement bonds into our depository post the Securities and Exchange Commission ( SEC) approval of allotments. We are excited at working with all stakeholders – the issuer, joint lead arrangers, Exchanges and more importantly esteemed investors – Pension Fund Administrators (PFAs), banks, asset managers, trustees, custodians and brokerage firms, who would be participating in this landmark transaction.

“We earnestly look forward to the approved allotment schedule to promptly credit investors’ accounts and provide a consolidated view of all their investments across the capital market.”

“Dangote Cement Series 1 bond is a landmark transaction for the Nigerian debt capital market, as it will be the largest-ever single corporate debt issue in the Nigerian capital market. Similar to the Dangote Cement N150 billion Commercial Paper (CP), which has helped deepen that segment of the money market and broaden local investors’ investment options in the fixed income market, the Series 1 bond, which is the debut issue out of the N300 billion Shelf Programme, will further reinforce the potential depth of the Nigerian debt capital market and the ability of local corporates to fund long term projects from the domestic debt market,” Jalo-Waziri added.

Vanguard