Agusto & Co. hereby affirms the “Bbb-” rating assigned to ABC Transport PLC’s ₦900 Million Bond
The rating expires on 30 June 2023.
Agusto & Co. hereby affirms the “Bbb-” rating assigned to ABC Transport PLC’s (“ABC Transport”, “ABC”, “the Issuer” or “the Group”) ₦900 Million Five-Year Fixed Rate Senior Secured Bond Due 2027 (“the Issue” or “the Bond”) under the ₦1 Billion Bond Issuance Programme. The rating reflects our opinion on the Issuer’s satisfactory operating cash flow position upheld by its short-operating cycle and favourable terms with customers and suppliers as well as its moderate leverage position. Nonetheless, the rating is constrained by ABC Transport Plc’s weak profitability metrics amid the continued escalation in its cost profile coupled with the inability to pass on significant cost increases to customers as well as its working capital position that requires improvement. In addition, the country’s uncertain political environment and the negative impact of the ongoing currency redesign policy are potential downside risks to the Group’s operations in our view.
In April 2022, ABC Transport PLC issued a ₦900 million Five-Year Fixed Rate Senior Secured Bond Due 2027 under the ₦1 Billion Bond Issuance Programme. The Bond attracts a 16.5% fixed coupon rate, which is payable semi-annually over the five-year tenor, while the principal amount will be redeemed half-yearly until maturity in 2027. The Bond constitutes a senior, direct, secured debt and ranks pari passu with other senior debts of the Issuer. The proceeds of the Bond were utilised to refinance the Issuer’s existing obligations as well as purchase new vehicles for the Group’s operations. The coupon and principal repayment obligations are being met from the operating cash flows of the Issuer. As at 31 January 2023, the Issuer had paid approximately ₦136 million split into coupon (₦74 million) and principal repayment (₦62 million) to the Bondholders.
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.”