Dangote Refinery Raises $750 Million In Debut Eurobond Ahead Of Planned IPO

Dangote Petroleum Refinery has raised $750 million through its first-ever Eurobond issuance, strengthening its funding base as the company prepares for a planned initial public offering (IPO).

According to a report by Eurobond.Africa, the five-year dollar-denominated bond, which matures in July 2031, was priced at par with a yield of 7.50 per cent under a Rule 144A private placement targeted at qualified institutional investors in the United States and other international markets.

The transaction follows a similar fundraising by Dangote Fertiliser in April, when the company secured $750 million through a five-year Eurobond issued at a 7.75 per cent yield.

Eurobond.Africa said the successful bond sale reflects growing investor confidence in Dangote Group’s export-focused businesses and signals that international investors are increasingly viewing the conglomerate independently of Nigeria’s sovereign risk.

The bond includes a make-whole call provision at US Treasury yields plus 50 basis points until July 2028, giving the refinery flexibility to refinance the debt as operations and cash flow continue to improve.

The report noted that the refinery priced the bond 25 basis points below the Dangote Fertiliser issuance completed three months earlier, reflecting stronger investor confidence as the refinery approaches its planned processing capacity of 700,000 barrels of crude oil per day.

It added that the pricing was broadly in line with Nigeria’s sovereign Eurobond yields, suggesting investors regard the refinery as a premium corporate credit despite operating in the country.

With the latest transaction, Dangote Group has now raised a total of $1.5 billion from international debt markets this year.

According to the report, the proceeds will be used to refinance shorter-term and more expensive local bank loans with longer-term fixed-rate debt, strengthening the group’s balance sheet ahead of planned capital market activities.

Eurobond.Africa said the conglomerate is entering an expansion phase valued at about $40 billion, with plans for a secondary listing of Dangote Cement in London and a dual-listed IPO for the Dangote Petroleum Refinery.

The report said securing long-term international financing before the planned listings would enhance the group’s financial position and improve its appeal to global investors.

The Eurobond issuance was arranged by an international syndicate comprising JPMorgan, Bank of America Merrill Lynch and Standard Chartered.

Meanwhile, Dangote Refinery has announced another reduction in the ex-depot price of Premium Motor Spirit (PMS), marking its fourth petrol price cut within one month.

The refinery said the latest N50 per litre reduction brings the cumulative decrease in its ex-depot petrol price to N200 per litre since May 30, lowering the gantry price to N1,075 per litre.

It also disclosed that it has reduced the ex-depot price of Automotive Gas Oil (diesel) by N300 per litre and Jet A1 aviation fuel by N520 per litre over the same period.

In a statement, the company explained that domestic fuel prices cannot immediately reflect changes in international crude oil prices because crude oil is often purchased weeks or months before refining.

It revealed that the average landed cost of crude processed stood at about $124.80 per barrel in May and $95.25 per barrel in June, compared with the current international benchmark of around $71.01 per barrel.

Despite the higher production costs, the refinery said it absorbed a significant portion of the increase instead of passing the full burden to consumers, adding that the strategy has helped keep fuel prices in Nigeria below those in neighbouring countries.

The company expressed optimism that if global crude oil prices remain favourable and lower-cost feedstock continues to enter its production cycle, Nigerians could see further reductions in petroleum product prices.