Rating Release

Agusto & Co. assigns ‘A-’ rating to the Series I 5-year subordinated bond (‘Tranche A’) and ‘A’ rating to the Series I 5-year senior unsecured bond (‘Tranche B’) of FSDH Funding SPV Plc with a stable outlook

 The rating expires on 4 December 2021.

 Agusto & Co. assigns a ‘A-’ rating to the Series I 5-year subordinated bond (‘Tranche A’) and a ‘A’ rating to the Series I 5-year senior unsecured bond (‘Tranche B’) of FSDH Funding SPV Plc (“the Issuer” or “the SPV”). The combined issue of ₦12 billion (“the Issue”) is the first series of a ₦30 billion debt issuance programme (“the Programme”) registered with the Securities and Exchange Commission (SEC) in 2021. The Issue is backed by FSDH Merchant Bank Limited (“FSDH” or “the Sponsor” or “the Bank”) which guarantees all obligations of the Issuer under the Programme. The rating assigned to Tranche A is a notch lower than the Sponsor’s stand-alone rating of ‘A’ by Agusto & Co., given its subordinated status, while the rating assigned to Tranche B reflects its seniority ranking to other unsecured obligations of the Bank. The Sponsor’s rating is hinged on its position as the second-largest merchant bank in Nigeria by asset size, a strong liquidity profile and good capitalisation ratios. However, the rating is constrained by concentration risk in the loan book and funding base that threaten asset quality and funding costs respectively. The COVID-19 pandemic has also accentuated credit risks in the lending landscape and this is a rating concern.