VenturesNow

Nigeria’s Dangote Sugar Refinery issues commercial papers worth N42.79 billion at rates of 25%, 23%

Published

5 months ago

June 17, 2024

Nigeria’s Dangote Sugar Refinery has declared the issuance of its N42.79 billion Series 4 and 5 commercial papers, offered at 25% and 23%, respectively, were successfully issued. The company’s N150 billion commercial paper issuance program included issuing the papers.

The 181-day Series 4 and the 265-day Series 5 were issued for a total of N12.93 billion and N29.86 billion, respectively. The notification released by the company states that institutional and individual investors, along with pension and non-pension asset managers, participated in the CP issuance.

Dangote Sugar Refinery has issued N39.39 billion in 266-day Series 1 notes at a 17.08% discount rate as part of its N150 billion commercial paper program. Furthermore, at a 19.84% discount rate, the corporation has issued N6.15 billion in 184-day Series 2 notes.

At a discount rate of 21.30%, the business issued 254-day Series 3 notes for N53.47 billion. Therefore, Dangote Sugar has raised N141.8 billion through its Series 1 to 5 CPs. The letter to the group states that the corporation plans to diversify its funding sources through the issuance of commercial papers. The money raised will go toward meeting finance needs and sustaining short-term operating capital.

According to Dangote Sugar’s Q1 2024 financial reports, interest costs on commercial papers totalled N543.2 million, while interest costs on bank loans came to N21.48 million. This suggests that commercial papers rather than bank loans are the company’s primary source of funding.

These commercial papers’ high discount rates are a reflection of Nigeria’s high-interest monetary environment at the moment. The CBN increased Nigeria’s benchmark interest rate by 750 basis points to 26.25% in 2024, which had an impact on manufacturers’ capacity to finance working capital.

In essence, the CBN’s decision has caused banks to significantly raise their lending rates. For instance, UBA’s loan rates to the manufacturing sector ranged from 28.50% to 32.00% as of May 17, 2024. Due to this increase, businesses are now looking for alternate sources of funding, and debt securities like bonds and commercial papers are one such choice.

However, treasury bills (NT-bills) and OMO bills issued by the CBN are vying with commercial papers for investors’ attention in the market for short-term debt securities. Furthermore, the CBN’s yield rates on NT notes and OMO bills in 2024 have shown to be extremely competitive. For instance, the June 5, 2024, 182-day and 364-day NT bills have respective discount rates of 17.5% and 20.67%.

Companies have been obliged to implement rather high interest rates for these CPs to compete favourably. Series 3, 4, and 5 CPs from Dangote Sugar are available at discounts of 21.30%, 23%, and 25%, respectively. It has also forced other issuers to adopt high interest rates. Series 1 and Series 2 CPs were issued by Coronation Group with respective discount rates of 19.83% and 21.81%.

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VenturesNow

Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

2 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.

VenturesNow

Dangote refinery begins petroleum sales to West Africa

Published

2 days ago

November 20, 2024

Ifeoluwa Dada

In an indication to traders that the activities of its mega-refinery might soon disrupt regional fuel markets, Nigeria’s private Dangote Petroleum Refinery has started exporting refined petroleum products to neighbouring West African nations.

According to a Bloomberg story on Tuesday, a tanker had transported a consignment of petrol from the Dangote Petroleum Refinery to seas off the coast of Togo, a nearby West African nation. The article cited data from Vortexa, Kpler, Precise Intelligence, a port report, and a ship-tracking tool.

According to the source, a CL Jane Austen recently departed west after loading over 300,000 barrels from Dangote.

Recall that Mustapha Abdul-Hamid, the chairman of the Ghana National Petroleum Authority, stated last month that the nation is thinking of purchasing petroleum products from the Dangote refinery in order to reduce the approximately $400 million it spends each month on more costly exports from Europe.

Speaking at the OTL Africa Downstream Oil Conference in Lagos, the chairman of NPA, Ghana, said that by eliminating freight expenses, buying from Nigeria instead of Europe will lower the cost of other products and services.

“If the refinery reaches 650,000bpd a day capacity, all that volume cannot be consumed by Nigeria alone, so instead of us importing as we do right now from Rotterdam, it will be much easier for us to import from Nigeria and I believe that will bring down our prices,” Hamid said.

Two weeks ago, it was announced that the refinery would start exporting fuel to Namibia, Angola, and South Africa. Four more African nations—Niger Republic, Chad, Burkina Faso, and Central Africa Republic—had also begun talks with the refinery, it was said.

According to a very reliable source who spoke directly to one of our reporters, the management of the refinery with a capacity of 650,000 barrels per day was in the advanced stages of negotiations with the nations to begin lifting petroleum.

“I can confirm to you that talks are actually at the advanced stage with Ghana, Angola, Namibia, and South Africa, while the initial discussion is coming up with Niger, Chad, Burkina Faso, and the Central African Republic,” the source said.

The petroleum product shipment is currently floating off the coast of Lome, which is a well-liked location for ship-to-ship transfers, according to the source.

Furthermore, the final destination of the cargo of the CL Jane Austen is uncertain.

Despite being off Togo, the region is frequently utilised for ship-to-ship transfers, thus the gasoline may eventually be transported elsewhere.

“While the shipment is tiny in the context of the global gasoline market, it signals the ramp-up of Dangote’s production and the potential to export significant volumes of gasoline beyond Nigeria, which could upend regional markets.”

Last month, the refinery sent its first shipment of petrol by sea to Lagos, a neighbouring commercial centre.

Under the regulatory statute, the Federal Government last month terminated the state-owned oil company’s monopoly on purchasing gasoline from the plant for domestic use, but it has permitted the ongoing importation of fuel from the US and Europe.