|
Listen now
Getting your Trinity Audio player ready...
|
GCR Ratings (GCR) has placed Dangote Cement Plc’s national scale long-term and short-term issuer ratings of AA+(NG) and A1+(NG) respectively on Rating Watch Negative.
Concurrently, GCR has placed the national scale long-term issue rating of AA+(NG) accorded to each of Dangote Cement Plc’s related bonds on Rating Watch Negative.
The Rating Watch Negative on Dangote Cement Plc (DCP or the company) and the bonds follow similar rating action on its parent, Dangote Industries Limited (DIL or the group), given the sub-group credit analytical approach with a cap to DIL’s ratings.
“This is because DCP is a core part of the group, being 86% owned by DIL and accounting for more than 80% of the group’s EBITDA for the financial year which ended 31 December 2023. In addition, DCP has material related party loan exposures to DIL, as it facilitated and on lent USD675 million to the latter from Afrexim Bank in 2024,” GCR Ratings said.
“Although there is the presence of minority shareholders, there has been a history of substantial dividend upstreaming to its parent amid material debt capital raise, which places significant liquidity strain on DCP.”
Total dividend payments amounted to NGN503 billion as of December 2024 (2023: NGN337 billion)
Although DCP continues to report strong earnings trajectory and robust cashflows, DIL on the other hand has a weaker credit profile, according to GCR.
This is because of the rise in debt and deterioration of the gearing metrics due to new working capital loans taken to procure crude oil for the refinery during its phased commissioning in 2024, compounded by the impact of the Naira devaluation on USD loans.
Group earnings were also compressed in the nine-month to 30 September 2024 (9M 2024), as the refinery was loss making during the commissioning phase, masking the profitability of other operating subsidiaries.
DCP’s NGN100Bn in Series 1 bonds, NGN46.4Bn Series 1 (Tranche B & C) bonds, and NGN116Bn Series 2 (Tranches A-C) bonds, are direct, unconditional, senior, unsubordinated, and unsecured obligations of DCP.
Hence, they rank pari passu with all other senior unsecured creditors of company and the bonds therefore bear the same national scale long-term rating and outlook accorded to DCP.
Follow the MoneyCentral Nigeria channel on WhatsApp: Click here!
 and A1+(NG) on Rating Watch Negative){kind=link}