Rating Release

Agusto & Co. hereby affirms the “Bbb” rating assigned to the Plateau State Government’s ₦16.1 Billion Bond

The rating expires on 30 September 2023.

Agusto & Co. hereby affirms the “Bbb” rating assigned to the Plateau State Government’s (“Plateau”, “PSG” or “the State”) ₦16.1 billion 17.5% Fixed Rate Bond Due 2025 (“the Issue” or “the Bond”). The assigned rating reflects the State’s adequate capacity to meet the Bond obligations principally from the uninterrupted monthly Irrevocable Standing Payment Order (ISPO) deduction of ₦400.8 million from Plateau State’s share of statutory allocation (SA) into a sinking fund account (SFA) managed by a team of four Trustees. The Bond which has a fixed coupon rate of 17.5% is being paid half-yearly, while the outstanding principal continues to be amortized semi-annually until the final maturity of the Issue in March 2025.

In April 2019, the Plateau State Government obtained approval from the Securities and Exchange Commission (SEC) to restructure the erstwhile ₦28.2 billion 17.5% Seven Year Fixed Rate Bond by extending the tenor of the outstanding Bond principal (₦16,139,453,174.79) by three years to 2025. As part of the restructuring terms, the Bondholders received a one-off restructuring fee of 1% as compensation
for the tenor extension and the Bond retained the fixed coupon of 17.5%. As a result, a revised ISPO of ₦400.8 million (formerly ₦609.9 million) was approved by the Federal Ministry of Finance is now being deducted monthly from the State’s SA into the SFA to meet the Bond obligations as and when due. Based on the Joint Trustees Report for the period ended 30 September 2022, the total ISPO contributions (including earned investment income) into the SFA since the issuance of the Bond in March 2015 amounted to ₦46.8 billion. Based on our
assessment, this amount was sufficient to cover payment due to Bondholders (comprising 15 semi-annual coupon payments and principal repayment) of ₦44.1billion, one-off restructuring fees (₦0.16 billion), and bond-related expenses (₦1.04billion), leaving a balance of ₦1.4 billion as at the 30 September 2022.

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.