GCR Assigns Jewel SPV N35bn Al-Ijarah Sukuk BBB+ (NG), Stable Outlook
GCR Ratings has assigned a national scale long term indicative Issue rating of BBB+ (NG) to Jewel Sukuk SPV Limited’s N35bn Al-Ijarah Sukuk Issue, the outlook on the rating is accorded as stable.
According to the emerging market rating agency, Jewel Sukuk SPV Limited is a special purpose vehicle incorporated as a funding vehicle, sponsored by Gombe State Government of Nigeria, and owned by Gombe State and Delegate Trustees solely for the purpose of raising funds for the development and management of selected assets belonging to its Sponsor.
The rating note recalled that GCR recently affirmed Gombe State’s national scale long-term senior unsecured rating of BB+(NG), underpinned by the well-established State Government structure and ongoing funding support from the Federal Government of Nigeria (FGN), but counterbalanced by the weak social profile, relatively weak internally generated revenue, and elevated leverage.
The Issuer is in the process of raising N35 billion from the debt capital market through an Ijarah Sukuk Issuance approved by Gombe State House of Assembly, it said. The Sukuk’s net proceeds will be utilised to finance the development of the selected assets, according to a GCR rating note obtained by MarketForces Africa.
Detail shows that the Sukuk has a tenor of seven years, with maturity in 2029, and constitutes an irrevocable and unconditional obligation of Gombe State and shall rank pari passu in all respects with Gombe State’s existing debt obligations.
Payment obligations of the Issuer in respect of the Sukuk Issuance are secured by an Irrevocable Standing Payment Order (ISPO) approved and issued by the Office of the Federal Minister of Finance as a first-line charge upon and payable out of the statutory allocations of Gombe State.
To this end, a sum of N665,605,647.90 would be transferred monthly (for a period of 84 months) from Gombe State’s monthly statutory federal allocation into a payment account (sinking fund) to be maintained solely by the Delegate Trustees towards the repayment of the Issuer’s obligation in respect of the Sukuk Issue.
Due to this fact, GCR analysts provided a three-notch uplift for the Sukuk above the long-term senior unsecured rating of Gombe State. As such, any changes in the rating assigned to Gombe State will directly affect the Sukuk rating.
However, the rating note states that the stable outlook reflects GCR’s view that Gombe State will continue to enjoy strong financial support from FGN.
It said given that the indicative rating is intrinsically linked to the Sponsor’s national scale long-term senior unsecured credit rating, any change in the rating assigned to the Sponsor would affect the Sukuk rating. #GCR Assigns Jewel SPV N35bn Al-Ijarah Sukuk BBB+ (NG), Stable Outlook
