GCR Ratings, an affiliate of Moody’s, has assigned Dangote Industries Limited (DIL) a national scale long-term issuer rating of AA+(NG) and a short-term rating of A1+(NG). However, Fitch, a global rating agency, has a differing opinion on DIL’s creditworthiness.
GCR affirmed the national scale long-term issue rating of AA+(NG) for DIL’s bonds and revised the outlook from stable to evolving. The agency cited significant growth in earnings from the new petrochemical refinery and robust expectations from other businesses. However, the ratings are constrained by the adverse impact of currency devaluation on profitability and financial position due to significant foreign debt exposure.
Fitch, on the other hand, downgraded DIL’s long-term rating to ‘B+(nga)’ from ‘AA(nga)’ and placed the ratings on negative. The downgrade reflects significant deterioration in liquidity position, operational and financial underperformance, and lack of contracted backup funding to repay debt facilities maturing in August 2024.
Key factors driving the downgrade include immediate refinancing risks, foreign exchange mismatch eroding liquidity, complex debt composition, low fertilizer utilization, and reduced cement profitability. Fitch expects the fertilizer and oil refinery segments to contribute significantly to consolidated EBITDA by 2024 and 2025.
While GCR maintains a positive peer comparison consideration for DIL, Fitch notes that DIL’s financial structure is weaker than peers due to high refinancing risk and lumpy maturity profile in USD-denominated debt.
