Dangote Cement Plc recently listed three tranches of N50-billion ($122 million) bonds under its N300-billion ($731 million) debt issuance program on the Nigerian Exchange (NGX).
This followed the announcement that the company successfully issued N50-billion ($122 million) Series-1 fixed-rate senior unsecured bonds several months ago, the first made under its new N300-billion ($731 million) multi-instrument issuance program.
What the new issuance is.
Similar to its first issuance, the latest set of bonds are senior, unsecured and fixed-rate.
Fix-rate means the security pays the same level of interest over its entire term. That is, an investor who seeks a guaranteed interest rate over a specified period of time might purchase such a bond.
As an unsecured bond, it is not backed by equipment, revenue, or mortgages on real estate, which exposes it to more risk than secured bonds. Consequently, such bonds typically pay higher interest rates than secured bonds.
The bonds comprise 3.64 million units of a three-year, 11.25-percent senior unsecured fixed-rate bond due 2024, 10.45 million units of a five-year unsecured fixed-rate bond due 2026 and a seven-year 13.50-percent senior unsecured fixed-rate bond due 2028.
According to the NGX, the bonds, which were brokered by the Lagos-based capital market conglomerate Meristem Securities, can be acquired at par* N1,000 per unit and will mature in May of the final year of tenor, as applicable to each bond.
This allows Dangote Cement to broaden its funding sources, as it accesses long-term debt at competitive prices from the capital market.
*Par is the face value of a share or other security, distinct from its market value.
