Dangote Cement seeks to raise fresh N60bn through commercial papers to finance business

Dangote Cement has listed two series of commercial papers on the FMDQ Exchange worth N60.01 billion under its N300 billion issuance program.

The company hopes to raise roughly N3.42 billion and N56.59 billion through Series 10 and 11, respectively.

According to a notice by the exchange, Rand Merchant Bank, under its N80bn issuance programme, also received approval for the quotation of N25bn Series 7 commercial papers.

According to Investopedia, commercial paper is an unsecured, short-term debt instrument that corporations typically use to finance short-term liabilities such as payroll, accounts payable, and inventories.

This comes after Dangote Cement raised funds under its N300 billion initiative by issuing commercial papers in 2023.

Series 8 and 9 of the Commercial Papers, worth N32.9 and N50.33 billion, respectively, were issued by one of the biggest cement makers in Africa on July 17, 2023.

An uptick in commercial paper issuance

Punch reported that an Afrinvest full-year review and 2024 outlook cited an uptick in commercial paper issuance in 2023.

The increasing finance cost largely drove this via bonds and banks. According to the asset management company, the value of newly issued CPs increased to N900 billion in the reviewed year from N670 billion in 2022.

The number of issuances grew, increasing from 94 the year before to 140. Nonetheless, the year-end average issue yield was constant at 16.4%.

As of October, March had the largest value of newly listed CPs at N354.18 billion, followed by August with N239 billion. The lowest levels were reported in October, with N36.51bn, and June, with N82.13bn worth of newly listed CPs.

Explaining the reason for the rise in commercial paper issuance, the FMDQ stated:

“To guarantee sustained business operations in the current challenging economic environment, corporate institutions have continued to explore alternative financing options by tapping the debt capital market to plug capital shortfalls.”

Meanwhile, Legit.ng reported that the cement company generated nearly N1 trillion in revenue from its Nigerian operations during the first nine months of this year.

The result shows an increase from N890.65bn in 2022 to N933bn in 2023, marking a 4.76% growth.