Home » Aliko Dangote’s cement giant issues $122-million Series-1 fixed rate senior unsecured bonds

Aliko Dangote’s cement giant issues $122-million Series-1 fixed rate senior unsecured bonds

by Ishioma Emi

Dangote Cement Plc has announced the successful issuance of its $122-million (N50 billion) Series-1 fixed rate senior unsecured bonds. The issuance is the first made under its new $731-million (N300 billion) multi-instrument issuance program, the company stated in a press release.

Issued on May 26, the bonds went at coupon rates of 11.25 percent, 12.50 percent and 13.50 percent for 3-, 5- and 7-year tranches. Dangote Cement plans to use the issuance proceeds to fund expansion, short-term debt refinancing and working capital requirements.

“This bond issuance allows us to move a step further in achieving our expansion objectives and will be deployed to projects instrumental in supporting our export strategy while improving our cost competitiveness,” Dangote Cement CEO Michel Puchercos said.

According to the release, the issuance saw participation from a broad range of investors, including domestic pension funds, asset managers, insurance companies and high net-worth investors. 

A brief explanation of the nature of the issued bond

The latest bond is a fixed rate bond. This means that it pays the same level of interest over its entire term. An investor who wants to earn a guaranteed interest rate for a specified period could purchase a fixed rate bond.

It is an unsecured bond. This means that it is not backed by equipment, revenue, or mortgages on real estate. Therefore, it naturally carries more risk than secured bonds.

This explains why they typically pay higher interest rates than do secured bonds.It is a senior bond.

This means that it has a higher priority compared to another bond in the event of liquidation. For example, suppose the cement company goes bankrupt and is liquidated. In that case, holders of the senior bond must be paid before holders of junior bonds.

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