In a fresh move to strengthen its financial base, Dangote Sugar Refinery has launched its Series 6 and 7 commercial paper offerings, seeking to raise up to N50 billion from Nigeria’s debt market.
This development is part of the company’s ongoing N150 billion commercial paper issuance program, a strategic initiative designed to bolster its working capital and operational efficiency.
The latest offerings follow the successful issuance of Series 4 and 5 commercial papers in mid-June, which collectively raised N42.79 billion. Investors showed substantial confidence in the company during those issuances, with discount rates of 23% and 25% yielding competitive returns. Series 4, an 181-day note, raised N12.93 billion, while the longer 265-day Series 5 secured a more substantial N29.86 billion.
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Building on this momentum, Dangote Sugar is returning to the market with Series 6 and 7 papers, which have been carefully structured to attract diverse investors. Reports indicate that Series 6, with a tenure of 180 days, offers a discount rate of 24.9%, translating to an implied yield of 28.5%.
Meanwhile, Series 7, spanning 270 days, is priced at a 24.55% discount rate, delivering an implied yield of 30% to participants. The subscription period remains open until December 12, 2024, providing a window for institutional and individual investors to participate in the program.
This round of fundraising is part of Dangote Sugar’s broader strategy to leverage Nigeria’s capital markets to meet its operational needs and support expansion plans. The program, which commenced earlier this year, has proven to be a key tool for securing financing in a challenging economic environment.
According to a notice from the company, the issuance attracted a diverse range of investors, including pension and non-pension asset managers, as well as institutional and individual participants.
Since its inception, the company has successfully raised a cumulative N141.8 billion across five series. This includes the initial Series 1 issuance in early 2024, which raised N39.39 billion at a 17.08% discount rate, and Series 3, the largest single issuance to date, which also garnered N53.47 billion at a discount rate of 21.30%.
The funds raised are expected to ensure smooth operations and help the company mitigate economic pressures that have disrupted Nigeria’s industrial and consumer goods sectors.
Dangote Sugar’s stock performance this year illustrates the company’s resilience despite the broader economic challenges. The year began on a high note, with its stock rising from N57 to N67.90 in January, buoyed by robust trading volumes of 95.1 million shares. However, this early optimism waned as bearish trends took hold in February, bringing the stock down to N57.50. By October, the stock price had plummeted to N30.80, reflecting the difficult environment.
Nevertheless, a recovery in November has sparked renewed optimism, with analysts attributing this rebound to the company’s successful fundraising initiatives and operational adjustments.
The Series 6 and 7 commercial papers are expected to play a pivotal role in stabilizing the company’s financial outlook. Dangote Sugar aims to sustain its operations and improve investor confidence by securing fresh capital. Market observers believe this strategic move will position the company for long-term resilience and continued growth, even as Nigeria grapples with persistent economic headwinds.