Rating Release
Agusto & Co. affirms the “Bbb” rating assigned to Wema Funding SPV Plc’s Series II ₦17.7 billion 7-year fixed-rate bond, with a stable outlook.
The rating expires on 10 September 2022.
Agusto & Co. affirms the ‘Bbb’ rating assigned to the Series II ₦17.7 billion 7-year fixed rate bond (‘the Issue’ or ‘the Bond’) issued by Wema Funding SPV Plc (“the Issuer” or “the SPV”). The Issuer is a Special Purpose Vehicle (SPV) set up by Wema Bank Plc (“the Bank”, “Wema Bank” or “the Sponsor”) for the issuance of debt securities.
The rating assigned to the Bond is a notch higher than the Sponsor’s stand-alone rating of ‘Bbb-’ by Agusto & Co., given its structure which comprises a 13.53% 7-year Federal Government of Nigeria (FGN) bond investment of ₦7.8 billion in the custody of the Joint Trustees. This provides a good recovery prospect in the unlikely event of a default. Wema Bank Plc’s rating reflects its improving profitability metrics, satisfactory asset quality, good liquidity profile and experienced management team. However, the rating is constrained by the obligor concentration in the loan book, high operating cost profile, the harsh regulatory environment and slow macroeconomic recovery.
