GCR Affirms NSP-SPV Powercorp Plc’s Series 1 Guaranteed Bond Rating of AAA(NG)(sf); Outlook Stable

29 Jan 2020 In Rating Notifications

GCR Affirms NSP-SPV Powercorp Plc’s Series 1 Guaranteed Bond Rating of AAA(NG)(sf); Outlook Stable

Lagos, 28 January, 2020—Global Credit Ratings (“GCR”) has affirmed the public long-term issue credit rating of AAA(NG)(sf) assigned to NSP-SPV Powercorp Plc’s (“NSP-SPV”, or “the Issuer”) N8.5bn Series 1 Guaranteed Green Infrastructure Bonds Issue (“the Bonds”); with the outlook accorded as Stable. The rating accorded to the Series 1 Bonds issued by NSP-SPV under its N50bn Programme relates to timely payment of interest and principal, as such, the Programme is not rated; only the Series 1 Bonds are.

 

RATING RATIONALE OF THE ISSUE

NSP-SPV was incorporated by North South Power Company Limited (“NSP”) as a special purpose vehicle to raise funds from the Nigerian capital market or other international markets by way of debt and other forms of capital, to finance various capital projects. In this regard, NSP-SPV registered a N50bn Bond Issuance Programme (“Programme”) with the Securities and Exchange Commission (“SEC”) in February 2019, and raised N8.5bn from the capital market under its Series 1 Guaranteed Bonds. The Series 1 Guaranteed Senior Fixed Rate Bonds constitutes direct, senior, unconditional and unsubordinated obligations of the Issuer. All payment obligations under the Issue (except otherwise provided for by applicable laws) rank equal with all other present or future unsubordinated payment obligations of both the Issuer and the Guarantor.

By virtue of the guarantee agreement entered into by InfraCredit and the Trustees (acting on behalf of the bondholders) in relation to the Series 1 Bonds, InfraCredit, in its capacity as Guarantor, irrevocably and unconditionally guarantees the punctual and full (100%) settlement of i) scheduled interest payment ii) scheduled principal payment, iii) and any interest accrued but unpaid. GCR affirmed InfraCredit’s long term national scale rating of AAA(NG) in July 2019.

The Guarantee shall serve as a continuing security, and will be in full force and effect until all payments under the Series 1 Bonds have been fully discharged, and cannot be accelerated, except, the Guarantor in its sole discretion elects to do so. Accordingly, upon the occurrence of an Event of Default, the Guarantor will continue to be liable to make interest and principal payments on the Series 1 Bonds on the due date in accordance with repayment schedule.

The ‘AAA(NG)(sf)‘ public, national scale long term credit rating accorded to the Bonds is fully supported by the Guarantor’s credit rating, as the InfraCredit Guarantee offers a timely and 100% coverage of all payments due to the bondholders, under the Series 1 Bonds. There has been no change to the structure of the transaction. The Trustees’ performance from UTL Trust Management Services Limited, dated 14 November 2019 indicates that the first coupon payment (N740.8m) was made on due date of 27 August 2019.

 

A downgrade in the rating of the Guarantor and/or relevant risk presenting entities will affect the rating of the Series 1 Bonds, but not necessarily in the same quantum.

NSP (Sponsor and Co-obligor) is a major private electricity supplier in Nigeria. Total generating capacity is 600 Megawatt (“MW”), while a number of projects in the pipeline could see generating capacity more than double over the medium term. NSP is also diversifying its energy sources, leveraging strong technical backing off its diverse shareholder base and an experienced management team. The Sponsor’s long term offtake agreements contribute to the stability and predictability of revenues. GCR affirmed the long term unsecured national scale rating of NSP of A-(NG) in December 2019.

NATIONAL SCALE RATINGS HISTORY


ANALYTICAL CONTACTS

Primary Analyst
Adekemi Adebambo
Lagos
+23 41 904 9462
.(JavaScript must be enabled to view this email address)

Committee Chairperson
Dave King
Chairman

APPLICABLE METHODOLOGIES AND RELATED RESEARCH

- Global Master Criteria for Rating Corporate Entities (February 2018)
- Global Structured Finance Rating Criteria (November 2018)
- North South Power Company Limited Rating Report (2017-19)
- Infrastructure Credit Guarantee Company Limited Rating Report (2017-19)


RATING LIMITATIONS AND DISCLAIMERS

ALL GCR’S CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://GLOBALRATINGS.COM.NG/UNDERSTANDING-RATINGS. IN ADDITION, GCR’S RATING SCALES AND DEFINITIONS ARE ALSO AVAILABLE FOR DOWNLOAD AT THE FOLLOWING LINK: HTTP://GLOBALRATINGS.COM.NG/RATINGS-INFO/RATING-SCALES-DEFINITIONS. GCR’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, PUBLICATION TERMS AND CONDITIONS AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE AT HTTP://GLOBALRATINGS.COM.NG.


SALIENT FEATURES OF ACCORDED RATINGS

GCR affirms that a.) no part of the rating process was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the rated entity, security or financial instrument being rated; c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial instrument.

The Issuer and the Arrangers participated in the rating process via face-to-face management meetings, teleconferences and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.

The rating has been disclosed to the Issuer.

The rating above was solicited by the Issuer of the Transaction, GCR has been compensated for the provision of the rating.

The information received from the Arrangers, Guarantor and other reliable third parties to accord the bond rating included: Trustees’ performance report dated 14 November 2019, Programme Prospectus, Series 1 Pricing Supplement, NSP-SPV Powercorp PLC incorporation documents, Programme Trust Deed, Series 1 Trust Deed, Deed of Guarantee, Recourse Deed, Custody Agreement, Litigation Opinion from Banwo & Ighodalo, and Legal Opinions from Templars and Olaniwun Ajayi.

 

ALL GCR CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS, TERMS OF USE OF SUCH RATINGS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS, TERMS OF USE AND DISCLAIMERS BY FOLLOWING THIS LINK:HTTP://GLOBALRATINGS.COM.NG/UNDERSTANDING-RATINGS. IN ADDITION, RATING SCALES AND DEFINITIONS ARE AVAILABLE ON GCR’S PUBLIC WEB SITE AT HTTP://GLOBALRATINGS.COM.NG/RATINGS-INFO/RATING-SCALES-DEFINITIONS. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES.  GCR’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE UNDERSTANDING RATINGS SECTION OF THIS SITE.


ALL GCR CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS, TERMS OF USE OF SUCH RATINGS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS, TERMS OF USE AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://GLOBALRATINGS.COM.NG/UNDERSTANDING-RATINGS. IN ADDITION, RATING SCALES AND DEFINITIONS ARE AVAILABLE ON GCR’S PUBLIC WEB SITE AT HTTP://GLOBALRATINGS.COM.NG/RATINGS-INFO/RATING-SCALES-DEFINITIONS. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. GCR'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE UNDERSTANDING RATINGS SECTION OF THIS SITE.

CREDIT RATINGS ISSUED AND RESEARCH PUBLICATIONS PUBLISHED BY GCR, ARE GCR’S OPINIONS, AS AT THE DATE OF ISSUE OR PUBLICATION THEREOF, OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. GCR DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL AND/OR FINANCIAL OBLIGATIONS AS THEY BECOME DUE. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: FRAUD, MARKET LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND GCR’S OPINIONS INCLUDED IN GCR’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND GCR’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND GCR’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL OR HOLD PARTICULAR SECURITIES. NEITHER GCR’S CREDIT RATINGS, NOR ITS PUBLICATIONS, COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. GCR ISSUES ITS CREDIT RATINGS AND PUBLISHES GCR’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING OR SALE.

Copyright © 2013 Global Credit Rating Company Limited. THE INFORMATION CONTAINED HEREIN MAY NOT BE COPIED OR OTHERWISE REPRODUCED OR DISCLOSED , IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT GCR’S PRIOR WRITTEN CONSENT. The ratings were solicited by, or on behalf of, the issuer of the instrument in respect of which the rating is issued, and GCR has been compensated for the provision of the ratings. Information sources used to prepare the ratings are set out in each credit rating report and/or rating notification and include the following: parties involved in the ratings and public information. All information used to prepare the ratings is obtained by GCR from sources reasonably believed by it to be accurate and reliable. Although GCR will at all times use its best efforts and practices to ensure that the information it relies on is accurate at the time, GCR does not provide any warranty in respect of, nor is it otherwise responsible for, the accurateness of such information. GCR adopts all reasonable measures to ensure that the information it uses in assigning a credit rating is of sufficient quality and that such information is obtained from sources that GCR, acting reasonably, considers to be reliable, including, when appropriate, independent third-party sources. However, GCR cannot in every instance independently verify or validate information received in the rating process. Under no circumstances shall GCR have any liability to any person or entity for (a) any loss or damage suffered by such person or entity caused by, resulting from, or relating to, any error made by GCR, whether negligently (including gross negligence) or otherwise, or other circumstance or contingency outside the control of GCR or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits) suffered by such person or entity, as a result of the use of or inability to use any such information. The ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. Each user of the information contained herein must make its own study and evaluation of each security it may consider purchasing, holding or selling. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY GCR IN ANY FORM OR MANNER WHATSOEVER.

Click on logo below to view more information about Global Credit Ratings Africa

Recent Rating Reports

15 Jan 2020: Eterna Plc

15 Jan 2020: Plateau State Government of Nigeria

15 Jan 2020: Fidson Healthcare Plc

15 Jan 2020: First Bank of Nigeria Limited

15 Jan 2020: Gombe State Government of Nigeria

15 Jan 2020: Nigeria Reinsurance Corporation

04 Oct 2019: Axxela Limited

04 Oct 2019: Transcorp Hotels Plc

04 Oct 2019: Capital Trust Investment & Asset Management Limited

04 Oct 2019: Chapel Hill Denham Money Market Fund

Purchase Rating Reports

Parties interested in purchasing individual or sectoral rating reports and/or bulletins from Global Credit Rating Company Limited are kindly requested to contact us on the following telephone numbers or email address.

Telephone:(+2341) 904 9462-3, 904 9466, 0805 615 8393, 0803 352 7871

Email: bisi@warltd.com

Email: tunde@globalratings.net

Recent Bulletin Releases
Rating Sectors
Credit Ratings

For a full list of Credit Ratings performed by Global Credit Ratings Company Limited please click here