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Dana Group seeks N4.5b from NSE

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Dana Group of Companies Plc plans to raise about N4.5 billion from the capital market through a medium-term debt issue.

Dana Group plans to float a six-year bond to raise N4.5 billion. It will carry a fixed-rate coupon and will be due for redemption in 2020.

The corporate bond is expected to be listed on the Nigerian Stock Exchange (NSE). The NSE has given its approval to the corporate bond.

Sources said the net proceeds of the bond issue would be used to strengthen the operations of Dana Group, a conglomerate of several businesses across various sectors of the Nigerian economy.

From its maiden business of pharmaceuticals manufacturing in the mid 80s, the group has diversified into not less than eight other businesses including bulk importation of industrial chemicals, affordable pharmaceuticals and surgicals, commodities, polyethylenes,  automobiles, electronics and white goods.

It inaugurated a plastics plant for household products in 2000 and followed this by setting up a pharmaceutical formulation plant and a table water bottling plant in 2003. The group also ventured into the manufacturing of food products with an instant milk plant under the banner of danaco milk  and an instant noodle plant under the banner of Dana Sun Yum Noodles in 2007, and a rice milling plant too, using state-of-the-art food processing equipment from the world leaders in their fields. Dana Group also acquired steel rolling mill in Katsina to produce debars and wire rods, which was a high point in 2006. The group has also diversified into the food sector, automobile sector and aviation sector.

Global corporate new bond issuance reached $3.2 trillion last year, the second highest annual total since 2009’s $3.3 trillion, according to Standard & Poor’s (S & P).

In a report on credit trend, Standard & Poor’s stated that investor appetite for corporate debt was very healthy for most of the year, dipping only during certain periods due to the uncertainty related to the timing of the Fed’s tapering.

According to the report, with a relatively low and stable cost of capital, many companies pursued capital-intensive projects, made strategic acquisitions, and pre-financed or refinanced obligations.

“Both investment-grade and speculative-grade bond issuance were strong in 2013. Of the $3.2 trillion in new corporate debt issued globally, investment-grade corporate issuance comprised nearly $1.8 trillion or 55.1 per cent of the total, while speculative-grade debt reached a record-high of $507 billion or 15.7 per cent of the total,” the report stated.

S & P noted that the sharp rise in the issuance of speculative-grade debt is telling as investors appeared to have become more comfortable with riskier assets in 2013 as they searched for ways to improve overall yield.

To put  this in perspective, speculative-grade bond issuance was $419 billion in 2012. Previous to the recession, in 2006 and 2007, speculative-grade bond issuance only reached $208 billion and $213 billion, respectively, before dropping as low as $56 billion in 2008. Even entities at the lowest end of the ratings spectrum were able to sell their bonds on the capital markets, which is partly the reason why defaults were less frequent in 2013.

Globally, only 2.16 per cent of speculative-grade companies defaulted in the 12 months through the end of November, last year, down from 2.5 per cent in 2012. Standard & Poor’s Ratings Services did not rate $942 billion of the $3.2 trillion in new bonds that were issued last year.

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