ABSA arranges Dangote Cement’s record bond issuance

The Absa Group headquarters in Johannesburg. Picture: GETTY IMAGES/WALDO SWIEGERS
The Absa Group headquarters in Johannesburg. Picture: GETTY IMAGES/WALDO SWIEGERS

Banking group Absa said on Thursday that it has arranged Nigeria’s biggest corporate bond issuance, 100-billion naira (R4.4bn) in notes issued by Dangote Cement.

The transaction follows a number of noteworthy transactions in Nigeria Absa said it has participated in, including mergers and acquisitions, and the largest ever initial public offering (IPO) on the Nigerian Stock Exchange — the $4.4bn (R76bn) listing of telecoms group Airtel Africa in July 2019.

The bond offering 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 April 3 and closed on April 15 at a coupon rate of 12.5%. The five-year, fixed-rate, senior unsecured bonds will be used by Dangote to refinance existing short-term debt, and other corporate purposes.

The bidding took longer than normal due to Covid-19, Absa said.

Again, the bond issuance was a landmark deal given the turbulent market caused by the sharp fall in oil prices and the impact of the novel coronavirus, which resulted in lockdowns being imposed in the states of Lagos, Abuja and Ogun, which lasted the duration of the book-build period,” said Feyi Olusanya, MD of Absa Capital Markets Nigeria.

Despite the lockdown, investors held virtual credit committee meetings and bidding in the book was done while navigating working from home, Absa said. 

MD of investment banking at Absa, Hasnen Varawalla said, “Absa is optimistic about the long-term economic prospects for Nigeria, and is committed to expanding our business and supporting the needs of our clients.” 

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