BUA Cement Plc to issue fresh bonds to finance expansion
Nigeria’s third biggest cement firm BUA Cement Plc plans to issue a second tranche of bonds under its N200 billion programme to finance expansion, its chief executive has said.
Yusuf Binji said BUA issued the first tranche of N115 billion worth of bonds in 2020.
He did not give a time for the future sale and said the amount of the issue would depend on its funding needs.
The bond plan comes after MTN Nigeria, the local unit of South Africa’s telecoms group announced the issuance of N110 billion bond.
Yields in Nigeria are at historic lows after the Central Bank of Nigeria (CBN) cut rates twice last year to lower borrowing costs for the government, creating opportunities for firms to sell debt at more attractive rates.
BUA plans to expand capacity to 20 million tonnes from 11 million with the addition of new lines across three mostly northern states in Nigeria.
The cement firm said it will commission a three million tonne production line by the end of this year to add to its existing two million tonne plant in Sokoto.
The company is also targeting exports especially with the start of the Africa free trade area.
“We only export our excess capacity if the Nigerian market is not able to take up what we are producing,” Binji told an analyst call.
“Demand has been extremely strong in the last one year … we will resume when the opportunity arises,” he said, adding exports were below 1 percent of production.