GCR Accords Indicative Rating to Ardova’s Proposed N22bn Series 1 Bond
GCR Ratings (GCR) has assigned a national scale long term indicative rating of A-(NG)(IR) to Ardova Plc.’s proposed up to N22 billion Series 1, Tranches A & B, senior unsecured Bonds, saying the outlook on the rating is stable.
The rating agency said the indicative rating assumes that the conditions in the Bonds will not change and will receive regulatory approval.
Ardova Plc, the issuer, is a leading player in the Nigerian oil and gas downstream sector, whose competitive position is underpinned by its integration along the value chain, solid earnings performance through the cycle and moderately strong credit protection metrics and capital structure, GCR said.
GCR recently affirmed the national scale long-term rating of A-(NG) assigned to the Issuer.
The ratings revealed that Ardova is in the process of registering a N60 billion Bond Issuance Programme with the Securities and Exchange Commission and expects to issue up to N22 billion in Series 1 under the Programme.
Explaining further, GCR said this will likely be through two distinct Tranches (A & B) with identical features except for their respective size and maturity dates. It added that the amount for each of the two Tranches will be allocated upon completion of book-building.
However, GCR said the Tranche A Bonds will have a seven-year maturity, while Tranche B, 10-year. It said the coupon payments will commence from the issue date and be payable semi-annually in arrears up to and including the maturity date.
The rating firm also said the principal repayment on both Tranches will be made on an amortised basis on each coupon payment date as from 2023 following an 18-month Principal moratorium period.
The Series 1 Bonds (Tranches A & B) will be senior, direct, unconditional, and unsecured obligations of the Issuer. Being senior unsecured debt, the proposed Series 1 (Tranches A & B) Bonds will rank pari passu with all other senior unsecured creditors, GCR said.
As such, it noted that the Bonds will bear the same national scale long term rating as that accorded to the Issuer. Accordingly, any change in the Issuer’s long-term rating would impact the Bond rating.
Outlook Statement
The Stable Outlook reflects GCR’s expectations that the Issuer will sustain sound earnings over the rating horizon, which should cushion the impact of the anticipated increase in debt on leverage metrics.
“We also envisage that the intermediate liquidity assessment will continue to be supported by good operating cash flows and the Issuer’s strong relationships with lenders”, GCR added.
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GCR Accords Indicative Rating to Ardova’s Proposed N22bn Series 1 Bond
