GCR affirms favorable AA+ rating for Dangote Industries

GCR Ratings has affirmed Dangote Industries Limited’s national long-term and short-term issuer ratings of AA+ and A1+, respectively.

In its report on Tuesday, GCR also raised the country’s long-term financing of Dangote Industries Funding Company’s NGN10.5 billion Series 1 Tranche A Note at AA+(NG) and the NGN177.1 billion Series 2 Tranche B Emphasize the note. Senior unsecured amount of NGN112.4 billion.

GCR said the outlook for these ratings has changed from “stable” to “growth.”

“The ratings have been affirmed due to the prospect of significant revenue growth from the commissioning of the new petrochemical refinery and the expectation of strong earnings from other businesses,” it said

The ratings firm highlighted the impact of the depreciation of the naira on Dangote Industries’ financial position, saying, “Given the group’s high external debt, the negative impact of currency depreciation.” the group’s profitability and financial condition have hampered the rating “.

Acknowledging the viability of the Dangote Group, GCR said, “Starting its refining business (production of diesel, naphtha, heavy fuel oil and aviation fuel) by January 2024 will force the group.” operational intensity, which will complement the group’s existing portfolio of businesses “Given its size as a major explorer in Africa and Europe, we expect the group’s operations to move more into the oil refining sector.” We also expect capacity exports to strengthen after seeing refined oil shipments to Europe for the first time and support continue to show strong gains.” and market leaders on their side in the various fields.

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“We maintained our favorable peer rating for DIL, which supported the importance of its refineries to the Nigerian economy. However, we lowered the amount of support used on this rating component as contributing factors are expected.” will provide significant improvements to the group’s and operating cash flows over the forecast period.” In 2022, DIL invested in a special-purpose vehicle sponsored by sponsor Dangote Industries Funding Plc. N300 billion was raised through the issuance of Series 1 (Tranches A and B) and Series 2 senior unsecured bonds. The Series 1 Tranches A and B Bonds and the Series 2 Bonds are senior unsecured bonds sponsored by DIL and therefore have priority over all other unsecured senior bonds in the Group.

“Accordingly, the bonds will carry the same ratings at the long-term sovereign level as assigned to DIL and any change in DIL’s long-term corporate rating will impact the bond rating We the Trustees of May 24, 2024.” reviewed the draft Mortgage Performance Report and found that the coupon was paid on time and the terms of the covenant or Trust Instrument were not complied with.

“However, the group faces significant fluctuations in energy cost volatility and relies on imported gypsum to produce cement, crude sugar and crude oil for its manufacturing plants.” .”

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