GCR affirms Viathan Funding Plc’s Series 1 Senior Guaranteed Bonds rating of AAA(NG)(sf)

20 Sep 2019 In Rating Notifications

GCR affirms Viathan Funding Plc’s Series 1 Senior Guaranteed Bonds rating of AAA(NG)(sf)

Lagos, 20 September 2019—Global Credit Ratings has affirmed the final public long-term rating of ‘AAA(NG)(sf)  accorded to the Series 1 Senior Guaranteed Fixed Rate Bonds (“Bonds” or “Series 1 Bonds”) issued by Viathan Funding Plc (“VFP” or “the Issuer”), under the Issuer’s N50bn Medium Term Note Programme (“MTNP” or the “Programme”); with the Outlook accorded as Stable.

VTP issued a total of N10bn in Series 1 Guaranteed Bonds. The Series 1 Bonds have a 10 year tenor, with the legal maturity date being 14 December 2027. The transaction structure incorporates a two-year moratorium and principal repayment will be made on an amortising basis, commencing from June 2020. The final rating relates to timely payment of interest and principal and is applicable to the Series 1 Bonds (and not the entire Programme). The rating excludes an assessment of the ability of the Issuer to pay any (early repayment) penalties. The rating will expire in September 2020.

RATING RATIONALE

Global Credit Ratings (“GCR”) has accorded the above credit ratings to the Issuer’s Series 1 Bonds based on the following key criteria:

Viathan Funding Plc, was incorporated by the Viathan Companies (“the Group”) in June 2017, as a Special Purpose Vehicle (“SPV”), to provide funding to the Viathan Companies, through the debt capital market or other miscellaneous means deemed fit by the SPV. The Viathan Companies are Co-Obligors on the transaction and they comprise eight underlying corporates namely; Viathan Engineering Limited; Akute Power Limited; Lisabi Power Limited; Island Power Limited; PIPP LVI Genco Limited; Gasco Marine Limited; Marine Power Limited and Tofu Energy and Power Company Limited. The Viathan Companies have built up combined generation capacity of 53.3MW across six plants (in three states) in a relatively short time frame, leveraging extensive technical expertise, linkages with well-established international partners, and off-take agreements with, state-owned entities/utilities and various commercial entities. GCR affirmed the Issuer’s national scale long-term unsecured rating of ‘BBB-(NG)’ in September 2019, with a Rating Watch Outlook.

Viathan Funding Plc raised N10bn from the capital market under its Series 1 Bond Issue on 15 December 2017, at a fixed annual interest rate of 16%, under the Programme. The Series 1 Bonds have a 10 year tenor, with the legal maturity date being 14 December 2027. Principal repayment will commence in June 2020, following expiration of a two-year moratorium. The Series 1 Senior Guaranteed Bonds constitute senior direct and unsubordinated obligations of the Issuer and the Co-Obligors.

InfraCredit Credit Guarantee Company Limited (“InfraCredit” or “Guarantor”) and the Trustee (acting on behalf of the bondholders) entered into a guarantee agreement pursuant to which InfraCredit, in its capacity as Guarantor, irrevocably and unconditionally guarantees the punctual and full (100%) payment of i) scheduled interest payments ii) scheduled principal due and payable by the Issuer under the Series 1 Bonds iii) and any interest accrued but unpaid in respect of the bond obligations. In July 2019, GCR affirmed InfraCredit’s national scale long-term rating of AAA(NG), with Stable Outlook.

The ‘AAA(NG)(sf)’ rating of the Series 1 Senior Guaranteed Bonds has been affirmed in line with the long-term rating of the Guarantor. The final, 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. 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. There has been no change to the structure of the transaction. The Trustee did not report any breach in transaction terms.

Upon the occurrence of any event of default, the Guarantor shall continue to be liable to make payments of Guaranteed Amounts on due dates in line with payment schedule, acting as primary obligor. The Guarantee will be in force until all payment obligations under the Series 1 Bonds have been fully discharged and cannot be accelerated unless the Guarantor in its sole discretion elects to do so.

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


NATIONAL SCALE RATINGS HISTORY


ANALYTICAL CONTACTS


Primary Analyst
Adekemi Adebambo
Senior Credit Analyst
.(JavaScript must be enabled to view this email address)
Lagos
+234 (1) 904-9462-3


Committee Chairperson
Dave King


APPLICABLE METHODOLOGIES AND RELATED RESEARCH

• Global Master Criteria for Rating Corporate Entities (February 2018);
• Global Summary Structurally Enhanced Corporate Bonds Rating Criteria (November 2018);
• Viathan Funding Plc Rating Reports (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; and d.) the rating will expire in September 2020.

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

The credit 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 Issuer, Trustee and other reliable third parties to accord the bond rating included:

Trustee’s performance report dated 5 August 2019, Issuer’s audited financial statements for the year ended 31 December 2018, Programme Prospectus, Series 1 Pricing Supplement, Viathan Funding Limited Memorandum and Articles of Association, Programme Trust Deed, Series 1 Trust Deed, Deed of Guarantee, Recourse Agreement, Account Bank Agreement, Legal Opinion from Olaniwun Ajayi, Legal Opinion from The New Practice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

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