Agusto & Co. upgrades Wema Bank Funding SPV Plc’s Series II Bond to ‘Bbb+’, with a stable outlook
The rating expires on 10 September 2023.
Agusto & Co. hereby upgrades the rating of Wema Funding SPV Plc’s (“the Issuer” or “the SPV”) Series II ₦17.7 billion 7-year fixed rate bond (‘the Issue’ or ‘the Bond’) to ‘Bbb+’. The Issuer is a Special Purpose Vehicle (SPV) set up by Wema Bank Plc (“the Bank”, “Wema Bank” or “the Sponsor”) for the issuance of debt securities. The rating assigned to the bond is hinged on the Sponsor’s upgraded rating of ‘Bbb’ and is a notch higher given that 45% of the bond proceeds was invested in a 13.53% 7-year Federal Government of Nigeria (FGN) bond and held in the custody of the Joint Trustees. In the unlikely event of a default, this provides some recovery prospects. The upgrade in the rating assigned to Wema Bank (“the Sponsor”) reflects its improving profitability metrics, satisfactory asset quality and liquidity profile. However, constraining these positive factors are the elevated operating cost profile, the harsh regulatory environment and prevailing macroeconomic headwinds.