Dangote Petroleum Refinery has successfully sold its first ever Eurobond, in a bid to diversify funding sources and make its strongerhold in the international capital market.
The fundraising sees Oracle Capital announce some of the largest bond sales by a private corporate industrial firm in Africa to date and marks a clear sign of improved confidence amidst investors in the refinery’s long-term commercial prospects.
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The money generated will be used to refinance existing debt, build liquidity and implement the refinery’s strategic plans.
International institutional investors were interested in the Eurobond even as the global economy remained shrouded in uncertainty, the company said, in a sign of investors’ confidence in the refinery’s operations and Nigeria’s growing downstream petroleum industry.
The successful patching similarly intensifies the Dangote Group access to International financing other than bank lending.
Nigeria is increasingly investing in its 650,000 b/d Dangote Refinery to accommodate the growing demand for locally-produced refined petroleum products and has now become the star of the country’s efforts to diversify refined petroleum products demand away from imported refined products.
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Producing petrol, diesel, aviation fuel and other refined products both for domestic use and for export purposes, the facility has continuously expanded its production ever since it started commercial operations.
Successful Eurobonds issue reflects growth of sophistication of African corporate financing, analysts said, and how large indigenous businesses are able to draw long-term international financing for strategic investments. They observed that a combination of funding sources offers financial flexibility and limits refinancing risks.
The deal also bolsters the Dangote Group’s overall policy of having an optimal capital structure that can allow expansion in all its operations across its energy and industrial businesses.
The company is tapping international debt markets to not only optimize financing costs but also to enhance relations with its investors in financial centres around the world.
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The capital market observers agree that the Euro Bond success, some say, would signal more confidence to Nigerian corporates to tap the international capital market as their confidence slowly regrows in Nigeria’s largest economy. They also want the ongoing operations of the refinery to play a major part in Nigeria’s foreign exchange collection from the oil, energy security and industrial development.
The financing achievement follows another step taken by the Dangote Refinery to strengthen its regional and international fuel distribution plan with the objective to become a significant supplier of refined petroleum products to Africa, contributing to Nigeria’s dream of becoming a net exporter of refined fuels to the world.
