GCR Assigns Sundry Foods Funding SPV Bonds A-(NG) Rating
GCR Ratings has assigned a national scale long term issue rating of A-(NG) to Sundry Foods Funding SPV Plc.’s N2.5 billion Series 1 Senior Unsecured Fixed Rate Bonds, with the outlook accorded as stable.
It was stated that Sundry Foods Funding special purpose vehicle (SPV) Plc, a special purpose vehicle owned and sponsored by Sundry Foods Limited as a funding entity, solely for the purpose of raising finance for its sponsor, the rating note explains. Sundry Foods who is the owner of the SPV is one of the leading food service companies in the Nigerian Quick Service Restaurants industry.
The emerging market rating agency said in December 2021, Sundry Foods raised an initial N2.5 billion in series 1 senior unsecured Bond Issuance under its N20 billion issuance programme. The rating note said the Bonds have a tenor of five years with a fixed interest rate of 13.5% payable semi-annually in arrears.
It said the Series 1 Bonds constitute direct, unconditional, senior, unsubordinated and unsecured obligations of the Issuer and at all times rank pari passu with all other senior unsecured and unsubordinated obligations assumed by the Issuer other than those mandatorily preferred by law.
GCR accorded a long term entity rating of A-(NG) to the Sponsor, with a stable outlook in June 2021, according to the rating note.
It said the rating was underpinned by Sundry Foods’ strong competitive position in its niche market, well-established brands across various business segments and relatively strong financial profile.
However, GCR hints that the programme Trust Deed does not offer Series 1 Bondholders any security over assets but does feature a negative pledge and other covenants to protect the interest of Bondholders.
“Sundry Foods, the Issuer and the Bond Trustees have executed a Deed of Undertaking, pursuant to which Sundry Foods, in its capacity as the Guarantor, absolutely, irrevocably and unconditionally guarantees the punctual and full payment of all debt and obligations owed by the Issuer under the Programme.
“According to the Deed of Undertaking, Sundry Foods undertakes that if the Issuer does not pay any of the obligations, it will immediately perform the payment obligations of the Issuer as if it were the primary obligor”, GCR said in the rating note.
“Given that Sundry Foods offers timely and full coverage of all payments due to the Bondholders, under Series 1 Senior Unsecured Bonds through the Deed of Undertaking, the Bonds bear the same default risk as to its Sponsor and would reflect similar recovery prospects to senior unsecured creditors in the event of a default”.
As such, the long term rating for the Series 1 Bonds is equivalent to the Sponsor’s long term senior unsecured corporate rating. It added that a change in the rating of the Sponsor will directly impact the rating of the Series 1 Bonds. #GCR Assigns Sundry Foods Funding SPV Bonds A-(NG) Rating
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