News in brief:
– Presco Plc has announced plans to raise a record N100 billion in Series 1 of its ₦150 billion bond programme.
– The 7-year bond issuance reflects strong investor confidence, backed by Presco’s robust financial performance in 2024.
Presco Plc, Nigeria’s leading palm oil producer, is preparing to issue a record-breaking ₦100 billion corporate bond as part of its ₦150 billion bond programme. The Series 1 bond, with a 7-year maturity, is expected to offer a yield between 23.25% and 23.75%, making it the largest corporate bond issuance in Nigeria’s palm oil industry.
With strong credit ratings of Aa from Agusto & Co. and A- from GCR, Presco Plc has cemented its reputation as a reliable and high-performing corporate entity. This bond issuance follows the company’s successful ₦34.5 billion raise in 2022 under its earlier ₦50 billion bond programme, which also had a 7-year tenure and a coupon rate of 12.85%.
Presco’s move stands out in the context of Nigeria’s corporate bond market, which has witnessed other significant issuances in recent years. For instance, MTN Nigeria raised ₦115 billion in 2022, while Dangote Group secured ₦112.42 billion the same year through their respective bond programmes. However, Presco’s planned ₦100 billion bond reflects a significant step for the agriculture industry, signalling strong investor confidence in the sector.
A strategic move amid high interest rates
The decision to issue a long-term bond in a high-interest environment underscores Presco’s strategic approach to financing. Since 2023, many corporations have favoured short-term commercial papers over bonds due to the elevated yields demanded by investors. In 2024, corporate bond issuances dropped sharply to ₦69.37 billion from ₦126 billion in 2023, reflecting market challenges.
Presco’s bold move, however, could help restore corporate confidence in Nigeria’s capital markets. It positions the company not only as a leader in its industry but also as a trendsetter in leveraging long-term funding opportunities.
Financial strengths drive investor interest
Presco’s financial performance has been a key driver of its market appeal. In 2024, the company delivered one of the highest returns on equity in Nigeria and achieved triple-digit growth in net profit, solidifying its standing as a top performer in the corporate landscape. These strong fundamentals make the ₦100 billion bond an attractive investment for both institutional and individual investors.
As Presco Plc ventures into this landmark issuance, its success could pave the way for other companies to explore similar opportunities, signalling a positive outlook for Nigeria’s capital markets.
