Rating Release
Agusto & Co. hereby assigns an indicative “S3 sf” rating to the AFEX Fair Trade Limited ₦150 Billion Asset-Backed Commercial Paper Issuance Programme
The rating expires on 30 November 2024.
Agusto & Co. hereby assigns an indicative “S3 sf” rating to the AFEX Fair Trade Limited’s (“AFTL”, “the Issuer” or “the Company”) up to ₦150 Billion Asset Backed Commercial Paper (ABCP) Programme to be issued as a conventional or Shari’ah compliant Notes (based on Murabaha Cost-Plus Structure) either as a single tranche or in multiple tranches of not more than 270 days (“the Issue” or “Notes”) from the date of issuance. The “S3” rating reflects i) the credit strength of AFEX Fair Trade Limited1 as the primary obligor responsible for meeting the commercial paper obligations, ii) upward notching based on the good recovery prospects of the 130% pledged commodities which in our view in a stressed position provides an overall satisfactory recovery prospect coverageat 1.04 times, and iii) the track record of the AFEX Group in commodity-backed transactions over the last three years. However, the absence of external liquidity support to fund the commodities exposure given the extreme liquidity requirements of ABCP Programmes is a rating concern.
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.
