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Agusto & Co. assigns a “Bbb” rating to Wema Funding SPV Plc’s ₦17.7 billion 7-year Fixed Rate Bond

Rating Release

Agusto & Co. assigns a “Bbb” rating to Wema Funding SPV Plc’s ₦17.7 billion 7-year Fixed Rate Bond.

The rating expires on 30 September 2020.

Agusto & Co hereby affirms the ‘Bbb’ rating assigned to the Wema Funding SPV Plc’s (‘the Issuer’) ₦17.7 billion 7-year Fixed Rate Bond (‘the Issue’ or ‘the Bond’). The Bond’s rating has been maintained at ‘Bbb’, reflecting our notching approach based on recovery prospect in the event of default. The rating is a notch higher than the ‘Bbb-’ rating assigned to Wema Bank Plc (‘Wema Bank’, ‘the Bank’ or ‘the Sponsor’) by Agusto & Co. on 20 May 2019, given the risk-free status of the ₦9.5 billion 13.5% Federal Government of Nigeria (FGN) bond in the custody of the Joint Trustee. Cash flows emanating from the treasury security are used exclusively to part-finance obligations to bondholders while the Sponsor undertakes to fund any shortfalls in principal and coupon payments. From issuance date in October 2018 to July 2019, cash flows from the treasury bond investment funded 36.6% of obligations to the bondholders while Wema Bank directly financed the remaining 63.4%.

This Rating Release is transmitted to you for the sole purpose of dissemination through your newspaper / magazine / agency. The rating release may be used by you in full or in part without changing the meaning or context thereof but with due credit to Agusto & Co.