Unbelievable for Aliko Dangote and his business:
“Fitch Ratings has downgraded Dangote Industries Limited’s (DIL) credit rating to B+ and placed it on ratings watch negative, citing concerns about its liquidity and ability to raise money. The downgrade reflects significant deterioration in the group’s liquidity position following lower than expected disposal proceeds, operational and financial underperformance compared to prior expectations. This development is particularly concerning given that DIL operates what will be Africa’s largest oil refinery once fully operational, a 650,000 barrel per day facility in Nigeria. The downgrade has sparked discussions about the broader implications for Nigeria’s business environment and the challenges faced by the country’s oil industry.” – X summary.
According to Fitch Ratings, Dangote Group plans to divest 12.75% stake in Dangote Petroleum Refinery over liquidity concerns. In a statement on Monday, Fitch said Dangote Group plans to use the proceeds from the stake sold to service a sizable syndicated loan that matures on August 31, 2024.
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Good People, this is a partial downgrade of Nigeria’s manufacturing sector. Do not imagine the possibility of Dangote Industries defaulting on these loans. That will mean your salt, your cement, your … will now be made by your village native doctor (he can turn the sand in the village square to salt, etc), as many have wished for ages. But for most of us, it would be REALLY bad.
Someone needs to help Dangote, not because he is a businessman, but because if the world abandons him, because Nigeria is throwing him under the bus, most things will crash.
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It gets more twisted by the day. The entities you believe are shortchanging or scamming you are also drowning, but because most people don’t understand Finance, you will always see misdirected anger. What happens if Dangote’s sprawling businesses suffer liquidity problems? There’s no one to step in, so expect everyone to be affected.
We may start praying for those we hate so much to succeed. Yes, because if they go down, you suddenly realize that you have been buried, and no way to come back: and you will be forgotten…
A lot is going on, if the attacks continue in all fronts, miseries will scale. Always wish those putting in the work and making efforts well, for your own good. Very important.
Meanwhile, Fitch Ratings has downgraded Dangote Industries Limited’s national Rating to ‘B+(nga) and placed the ratings on Rating Watch Negative. This is coming from a National Long-Term Rating of ‘AA(nga)’.
On GCR rating, the Firm said the ratings were affirmed on the prospects of significant growth in earnings following the commencement of operations at the new petrochemical refinery and robust earnings expectations from the other businesses.
In the report, the rating agency decried the impact of the naira devaluation on DIL’s performance stating that “the ratings are constrained by the adverse impact of the currency devaluation on the profitability and financial position of the group, given its significant foreign debt exposure.”
GCR in recognition of the potential of the Dangote Group added, “The group’s business profile is bolstered by the commencement of refining operations in February 2024 (with the production of diesel, Naphtha, heavy fuel oil, and aviation fuel), which now complement the already well-diversified group businesses.
“Accordingly, we expect the group’s business fundamentals to become increasingly tilted towards oil refining, given its size as the largest refinery in Africa and Europe. We also expect strong export sales potential given the recent debut exports of refined oil to Europe.
“The non-oil businesses continue to demonstrate strong earnings-generating capacity and market leadership in their respective sectors, underpinned by the above-peer production capacities and favourable demographics.”
It added that it had maintained a positive peer comparison consideration for DIL underpinned by the importance of the refinery to the Nigerian economy.
However, it said: “We have lowered the extent of support applicable under this rating component because we expect the support factors to translate to substantive enhancements to the group’s business and financial profiles over the outlook period.
“In 2022, DIL raised a cumulative N300 billion in Series 1 (Tranches A and B) and Series 2 Senior Unsecured Bonds issued by its sponsored special purpose vehicle, Dangote Industries Funding Plc. Being senior unsecured debt sponsored by DIL, the Series 1 Tranches A and B Bonds and the Series 2 Bond rank pari passu with all other senior unsecured creditors of the group.”
It explained that the Bonds bear the same national scale long-term rating as that accorded to DIL, and any change in DIL’s long-term corporate rating would impact the Bonds’s ratings.
On its part, Dangote Industries said that the group remains highly exposed to volatile energy cost dynamics and is reliant on the importation of gypsum for cement, raw sugar input, and crude oil for the refinery.
Tags: Dangote