Business & Economy

Dangote Sugar Issues N100 Billion Commercial Papers At 20.65%, 21.17% Rates

Dangote Sugar Refinery to borrow N50 billion in both Series 4 and 5 of its N150 billion Commercial Paper(CP) Issuance. This puts the total amount expected to be raised from the two series at N100 billion.

Series 4 of the company’s N150 billion commercial paper issuance program offers CPs with an 181-day tenor and a discount rate of 20.65%. While the Series 5 CPs have a 265-day tenor and are issued at a discount rate of 21.17%.

The offer which opened on May 16, 2024, will close on May 22, 2024, with settlement occurring on May 23.

Advertisement

Since Dangote Sugar Refinery’s N150 billion commercial paper issuance program was admitted to FMDQ on February 9, the company has raised about N99.01 billion in Series 1, 2, and 3.

In Series 1, N39.39 billion worth of the CPs were issued at a discount rate of 17.08% and a tenor of 266 days. For Series 2, N6.15 billion of the CPs were issued at a 19.81% discount rate and a tenor of 184 days. In Series 3, N53.47 billion worth of the CPs were issued at 21.30% and a tenor of 254 days.

Considering the further hike of the benchmark interest rate in Nigeria to 24.75%, lending to the real sector has become very expensive. This is highlighted by the attractive discount rates offered by Dangote Sugar in its commercial paper issuances.

Advertisement

Dangote Sugar’s commercial paper issuances offer discount rates of 21.3%, 21.17%, and 20.65% for Series 3, 5, and 2, respectively. The comparability of these rates to the returns on recently issued FGN Treasury bills makes these CPs a highly attractive short-term fixed-income investment option.

While these returns are attractive to investors, they underscore a pressing issue for the real sector: the high cost of financing. As of May 20, 2024, Stanbic IBTC charges the manufacturing sector lending rates as high as 50%, while banks like FCMB offer loans to the sector ranging from 23% to 40%.

In a fiscal year when players in the manufacturing sector have been hit with harsh operating conditions such as hiked energy costs, net losses due to their FX exposures and heightened inflation, having the cost of borrowing as high as 40% or 50% is a significant challenge.

Advertisement
Facebook Comments
Brand News Day

Recent Posts

Apple Unveils iPhone 17 Air, Slick, Slimmer Than Previous Models (PHOTOS)

Apple Inc is set to present a slimmer iPhone 17 Air model, marking a potential…

2 weeks ago

Six-Year-Old Ella Shoots, Kills American Police Officer In Mother’s Defense

A six-year-old girl, Ella, fatally shot a 28-year-old American police officer last month after witnessing…

2 weeks ago

LIRS Urges Taxpayers To Meet March 31 Deadline For Annual Tax Return Submission

The Lagos State Internal Revenue Service (LIRS) reminds all individual taxpayers, including self-employed individuals, those…

2 weeks ago

Stanbic IBTC Bank Partners Autochek To Boosts Car Ownership, Disburses N4Bn

Stanbic IBTC Bank, a prominent financial institution in Nigeria, has partnered with Autochek, an innovative…

3 weeks ago

Stanbic IBTC PMI®: Output Growth Accelerates To Fastest In Just Over One Year

The headline figure derived from the survey is the Stanbic IBTC PMI® - Purchasing Managers’…

3 weeks ago

Stanbic IBTC Bank Reintroduces Its Private Banking Offerings To Empower Nigerians Build Lasting Wealth

Stanbic IBTC Bank, a subsidiary of Stanbic IBTC Holdings and a leading financial service solutions…

3 weeks ago

This website uses cookies.