15 Sep

Daily Watch – FG inks ₦120b Bonny road project, Dangote sparks SA cement bidding war

  • Nigeria has started the sale of a ₦100 billion ($326 million) debut sovereign Sukuk on the local market to fund road infrastructure, the DMO said on Thursday. The seven-year Islamic bond which is structured as a lease will yield a 16.47 percent rental rate, payable semi-annually. Subscription for the bond, which is guaranteed by the government, will close on 20 September. The debut Sukuk was originally planned to go on sale in June for three days via book building. The planned Sukuk issue will target retail and institutional investors, with First Bank and Islamic wealth manager Lotus Capital managing the sale. The DMO said the bond will be tradable on the NSE and on FMDQ over-the-counter platform and that it may reopen the offer in case of an under-subscription.
  • Nigeria should see a bumper cocoa harvest in the coming season as late rains have helped boost pod production, the head of the cocoa association said on Thursday. Sayina Riman, president of the Cocoa Association of Nigeria, expects output for the new season which starts in October to hit between 300,000 tonnes and 320,000 tonnes, up sharply from the season just ended which was blighted by poor weather. The cocoa season in Nigeria runs from October to September, with an October-to-February main crop and a smaller light or mid-crop that begins in April or May and runs through September. The 2016/17 season started at a slow pace after drought cut the mid-crop harvest by 40 percent. Output for that season was estimated to reach 260,000 tonnes, Riman said, lower than a revised forecast of 280,000 tonnes and down from 340,000 tonnes forecast at the start of the season. The International Cocoa Organization, however, gives much lower estimates of Nigerian cocoa output. It forecast last season’s production at 220,000 tonnes.
  • The FG and Julius Berger have signed a ₦120 billion agreement for the construction of the Bonny Road in Bayelsa State. While the FG will provide ₦60 billion for the project, the NLNG will make up the balance. At the signing, the Minister of Power, Works and Housing, Babatunde Fashola, said the construction of the road would make a positive impact on the value chain. He said, “Essentially, we formally sign the agreement today. It concluded the procurement process for starting the constructing process of the Bonny Bridge.
  • Aliko Dangote has joined the race to buy South African cement maker PPC, which is already the subject of a takeover bid valuing the company at $700 million. Dangote Cement, which is controlled by Dangote and is the biggest cement maker in Africa with a capacity of nearly 46 million tonnes a year, said in a statement that it was interested in buying all of PPC’s shares. The expression of interest from the Nigerian company with a market capitalisation of $12 billion raised market hopes of a bidding war, sending PPC shares 5.5 percent higher to 6.29 rand. PPC’s local rival AfriSam launched an all-share merger proposal for South Africa’s biggest cement maker last week and PPC said it also had a third offer that was “credible and potentially value-enhancing for shareholders”. Dangote Cement, which has operations in 10 countries, is already present in South Africa through its 64 percent holding in Sephaku Cement.
  • Stanbic IBTC Bank will offer shareholders the option to receive scrip dividends in lieu of cash dividends over the next three years, it said on Thursday after it declared an interim dividend. The mid-tier lender, which is part of South Africa’s Standard Bank, did not give a reason for the move. The bank declared an interim dividend of ₦0.60 for its half-year to June 30. It set a reference price of ₦39.45 for the scrip issue, compared with Thursday’s share price of ₦40.02. “Shareholders have a choice of receiving dividends declared by the company, up to the year 2020, either in cash or may elect to receive their dividends as new ordinary shares in the company,” the bank said. Stanbic shares have gained 167 percent so far this year, outperforming the broader index, which is up 32 percent.