Dangote Cement, MTN, Others Raise N1.02trn CPs, Corporate Bonds from FMDQ

Kayode Tokede

With the increasing demand to expand business operations amid macro economy challenges, Dangote Cement Plc, MTN Nigeria, among other firms have raised a whopping N1.02 trillion via Corporate Bonds and Commercial Papers (CP) from the FMDQ Exchange market between January and October 2022.

The breakdown revealed that a total of N642.8billion CPs and N379.17billion Corporate Bonds were raised in the period under review. 

According to THISDAY investigations, Dangote cement and MTN Nigeria are the notable bond issuances in the period under review.

Dangote Cement Plc in May 2022 completed the issuance of N116 billion series 2 fixed rate senior unsecured bonds under its N300 billion multi-instrument issuance programme, while MTN Nigeria in October 2022 completed its N115billion Series 1 fixed rate bond issuance under its new N200billion bond programme and third bond issuance in the debt capital markets.

The Exchange also approved the listing of the GPC-SPV Company PLC N20 billion Series 1 Fixed Rate Bond under its N50 billion bond issuance programme on its platform.

Dangote Cement said the proceeds of the bond issuance would be used to finance the company’s Nigeria expansion projects, short-term debt refinancing and working capital requirements.

The Group Managing Director of Dangote Cement, Michel Puchercos in a statement had said the landmark transaction would fund the cement’s manufacturing company expansion projects and further support the implementation of export strategy.

For MTN Nigeria, the book build for the dual-tranche (four-year Tranche A and 10-year Tranche B) bond issuance had closed on September 21, 2022 with a total value of N168.54billion in bids received, representing a 1.68 times oversubscription (of the intended N100billion issuance).

MTN issued the Series 1 Tranche A and Tranche B Bonds at a clearing coupon of 13.50 per cent and 14.50 per cent, respectively. Of the total qualifying bids, MTN Nigeria opted to issue a combined value of N115billion across both tranches – N10.09billion in the four-year Tranche A and N104.91billion in the 10-year Tranche B.

The Chief Executive Officer of MTN Nigeria, Karl Toriola stated that the telecommunication giant intended to use the net proceeds of the offering to finance its network expansion, optimise working capital and for general corporate purposes.

He explained that, “The Nigerian capital markets continue to present us with the opportunity to raise long-term financing to aid investments in our network and diversify our funding sources.”

He said the bond would reinforce MTN Nigeria’s strategy of diversifying its funding sources in line with its corporate objectives.

Speaking with THISDAY, the Vice Chairman, Highcap Securities, David Adonri said: “Issuance of CPs in 2022 has improved because interest rate fell drastically to lower single digit. Cost of borrowing via CPs was to the benefit of corporate borrowers more than traditional bank credit.

“There was also an incentive for investors to invest in CPs due to their higher rates than deposit rate and Treasury Bill rate”

Analyst at PAC Holdings, Mr. Wole Adeyeye attributed increasing CPs to severe macro economy factors, stressing that a hike in production input has forced companies to raise capital.

The report by FMDQ Exchange disclosed that the total value of corporate bonds listed on FMDQ Exchange in October 2022 was N50.09billion compared to the previous month when no corporate bonds were listed on the Exchange.