Presco Plc, Nigeria’s largest palm oil producer, is set to issue an N100 billion bond, marking the first tranche of its N150 billion bond program.
This issuance, the largest in the industry, underscores Presco’s confidence in Nigeria’s capital markets and its strategic expansion plans.
Given the high interest rate in Nigeria, the yield on the 7-year bond is expected to range from 23.25% to 23.75%.
Presco’s strong financial performance and credit ratings have bolstered investor confidence. The company holds an Aa rating from Agusto & Co. and an A- rating from GCR, showcasing its financial strength and credibility. This will be Presco’s second major foray into the capital markets, following its successful N34.5 billion bond issuance in 2022, which carried a 12.85% coupon rate.
The proceeds from this bond will support the acquisition of Ghana Oil Palm Development Company Limited and the expansion of Presco’s operations. Part of this expansion includes completing its new mill at Ato Estate by 2025, a key component of its growth strategy.
Presco has demonstrated remarkable financial resilience, reporting a profit after tax of N38.8 billion in the first half of 2024, a 157% increase compared to the N15.1 billion recorded in the same period in 2023. Revenue surged by 83% to N88 billion, driven by strong sales of crude and refined products and expansion in the domestic market.
The issuance comes at a time when corporate bond activity in Nigeria has been subdued. In 2024, corporate bond issuances totaled N69.37 billion, a significant drop from ₦126 billion in 2023. Many companies opted for shorter-tenured commercial papers to navigate high interest rates. Presco’s decision to pursue a long-term bond signals optimism and a shift in market sentiment.
