Agusto & Co. hereby affirms the “A-” rating assigned to NCNR SPV Limited’s ₦10.5 Billion
The rating expires on 30 September 2023.
Agusto & Co. hereby affirms the “A-” rating assigned to NCNR SPV Limited’s (“NCNR”, “the Issuer”, “the SPV” or “the Company”) ₦10.5 Billion 14% Seven-Year Fixed Rate Bond Due 2027 (“the Series 1 Bond” or “the Issue”). The rating affirmation reflects the continuous fulfilment of the Irrevocable Standing Payment Order (ISPO) authorising the monthly deduction of ₦217.8 million from the Niger State Government’s (“Niger State”, “the Sponsor” or “the Guarantor”) share of centrally collected revenue (statutory allocation) into a dedicated Sinking Fund Account (SFA) towards meeting the Series 1 Bond obligations.
In July 2020, the Niger State Government sponsored the incorporation of a special purpose vehicle (NCNR SPV Limited) to facilitate the issuance of private bonds for the funding of infrastructure projects in the State. In September 2020, NCNR SPV Limited raised ₦10.5 billion Series 1 Bond to support the construction of revenue-generating and other infrastructure projects in Niger State. The Bond attracts a fixed coupon rate of 14% payable on the thirtieth day of March and September every year for seven years alongside the amortised principal amount. The Sponsor has pledged a portion of its monthly statutory allocation (amounting to ₦217.8 million) towards meeting the Series 1 Bond obligations. Also, NCNR SPV Limited has been granted a ten-year concession, which allows it to operate and manage the cash flows to be generated from the 84km Minna-Kataeregi-Bida Road (“the Toll Road”). The estimated completion date for the Toll Road project is the second quarter of 2023 (Q2’2023), which incidentally is the same period Alhaji Abubakar Sani Bello’s four-year term as Governor ends. Notwithstanding, we believe that the risk of revenue shortfalls arising from delayed completion of the project or the early termination of the concession agreement by the next Governor would have very little or no impact on the Sponsor’s ability to meet the Series 1 Bond obligations as the primary repayment source remains the pledged ISPO.
The opinions expressed in this rating release do not represent investment or other advice and should therefore not be construed as such. Visit www.agusto.com for further information.