GCR Ratings (GCR), an affiliate of Moody’s, has affirmed the national scale long-term and short-term issuer ratings of AA+(NG) and A1+(NG) respectively to Dangote Industries Limited (DIL).
GCR, in its recent report, also affirmed the national scale long-term issue rating of AA+(NG) accorded to each of Dangote Industries Funding Plc’s Series 1 N10.5 billion Tranche A and N177.1 billion, Tranche B Bonds and Series 2, N112.4 billion Senior Unsecured Bond. The outlook on the ratings has been revised to Evolving from Stable previously.
Meanwhile, Fitch Ratings has downgraded Dangote Industries Limited’s national Rating to ‘B+(nga) and placed the ratings on Rating Watch Negative. This is coming from a National Long-Term Rating of ‘AA(nga)’.
On GCR rating, the Firm said the ratings were affirmed on the prospects of significant growth in earnings following the commencement of operations at the new petrochemical refinery and robust earnings expectations from the other businesses.
In the report, the rating agency decried the impact of the naira devaluation on DIL’s performance stating that “the ratings are constrained by the adverse impact of the currency devaluation on the profitability and financial position of the group, given its significant foreign debt exposure.”
GCR in recognition of the potential of the Dangote Group added, “The group’s business profile is bolstered by the commencement of refining operations in February 2024 (with the production of diesel, Naphtha, heavy fuel oil, and aviation fuel), which now complement the already well-diversified group businesses.
“Accordingly, we expect the group’s business fundamentals to become increasingly tilted towards oil refining, given its size as the largest refinery in Africa and Europe. We also expect strong export sales potential given the recent debut exports of refined oil to Europe.
“The non-oil businesses continue to demonstrate strong earnings-generating capacity and market leadership in their respective sectors, underpinned by the above-peer production capacities and favourable demographics.”
It added that it had maintained a positive peer comparison consideration for DIL underpinned by the importance of the refinery to the Nigerian economy.
However, it said: “We have lowered the extent of support applicable under this rating component because we expect the support factors to translate to substantive enhancements to the group’s business and financial profiles over the outlook period.
“In 2022, DIL raised a cumulative N300 billion in Series 1 (Tranches A and B) and Series 2 Senior Unsecured Bonds issued by its sponsored special purpose vehicle, Dangote Industries Funding Plc. Being senior unsecured debt sponsored by DIL, the Series 1 Tranches A and B Bonds and the Series 2 Bond rank pari passu with all other senior unsecured creditors of the group.”
It explained that the Bonds bear the same national scale long-term rating as that accorded to DIL, and any change in DIL’s long-term corporate rating would impact the Bonds’s ratings.
On its part, Dangote Industries said that the group remains highly exposed to volatile energy cost dynamics and is reliant on the importation of gypsum for cement, raw sugar input, and crude oil for the refinery.
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