Stanbic IBTC Capital, and Stanbic IBTC Bank, subsidiaries of Stanbic IBTC Holdings Plc, have partnered with Dangote Cement Plc, Africa’s largest cement producer, to announce the issuance of a N50billion Series 1 and 2 Notes, the largest ever Commercial Paper (CP) issuance by a Nigerian company.Commercial Paper is a short-term, unsecured promissory note issued by companies to finance accounts receivable, inventories, and meeting short-term liabilities.
The N50billion issue part of the recently established Dangote Cement Plc’s N150billion CP Programme, announced on June 27. The series 1 and 2 notes is priced at spreads of 25 and 50 basis points over the chosen primary market sovereign benchmark rate, to achieve discount rates of 12.40 per cent and 12.65 per cent, respectively.
Stanbic IBTC Capital acted as sole Arranger of the CP Programme, while Stanbic IBTC Bank is the issuing, calculation, and paying agent for the transaction. The Series 1 and 2 Notes will be listed on Nigeria’s FMDQ OTC Securities Exchange on Thursday July 19.
According to a statement by the bank, funds raised from the CP Programme are to be used for capital expenditure, working capital and general corporate purposes, according to parties to the deal.
Speaking at the signing ceremony, which held at Dangote Cement Plc headquarters in Lagos, on Tuesday, the Executive Director and Head, Debt Capital Markets, Stanbic IBTC Capital, Kobby Bentsi-Enchill, expressed delight that the firm advised Dangote Cement to accomplish this landmark CP issuance.
According to him, Stanbic IBTC Capital was committed, in line with the Stanbic IBTC Group’s value proposition and investment banking pedigree, to assist businesses with high quality advisory and arranging services that would enhance their growth and expansion prospects by providing access to a diverse range of financing options within the domestic capital markets.
“Stanbic IBTC Capital will continue to exploit opportunities to help provide businesses with access to critical funding, short and long term, for their needs. This, we expect, will help stimulate growth via the mobilisation of debt and equity capital market instruments.
The Group Chief Executive Officer, Dangote Cement Plc, Joseph Oyeyani Makoju, said the choice of Stanbic IBTC as a partner in the CP Programme was an easy one considering the financial institution’s strong pedigree and expertise in investment banking.On the issuance, Makoju said: “This landmark transaction is the largest-ever Commercial Paper issuance by a corporate issuer in Nigeria. It allows us to broaden our sources of funding, and combine established bank lines of credit with access to capital market funding, which will lower our overall cost of borrowing.
“The success of this programme reflects the high quality of our business and its strong cash generation made possible by our market-leading positions in Nigeria, and across Sub-Saharan Africa, where demand for cement is growing rapidly.”
By Helen Oji
The Guardian Newspaper July 13th, 2018