GCR Revises GLNG Funding SPV Rating Outlook to Negative
GCR Ratings has affirmed the national scale long-term and short-term issuer ratings of BBB(NG) and A3(NG), respectively, assigned to GLNG Funding SPV Plc, with the outlook revised to Negative, from Stable previously.
The SPV is a non-operating special purpose vehicle established solely to raise capital through the issuance of debt instruments on behalf of its two underlying entities, Green Fuels Limited (GFL) and Green Liquefied Natural Gas Limited (GLNG).
As such, the assigned ratings reflect the integrated credit profile of GFL and GLNG, GCR stated.
“The revision of the outlook on GLNG SPV’s rating to Negative is due to the sharp and unexpected increase in debt over the last 12 months to finance the completion of its mini liquefied natural gas (LNG) plant, with resultant deterioration in leverage metrics to an unsustainable level”.
GCR said the group’s ratings continue to reflect strong earnings growth expectations, as the LNG plant is scheduled to commence operation from April 2026, strengthening the group’s market position and financial profile going forward.
“GLNG SPV’s market position reflects the combined strengths of the two underlying entities. GFL is a fast-growing compressed natural gas (CNG) distribution company in Nigeria, with facilities to compress and distribute approximately 10.9 million standard cubic feet per day.
According to the rating note, GLNG provides a gas-to-power solution but is still a modest player in the Nigerian market.
The group’s business profile and expanding customer base have been supported by the rising preference for natural gas as a cost-effective alternative source of fuel, with an estimated 15% share of the CNG market, GCR said.
Ratings analysts said that while the group’s competitive profile remains modest compared with larger players in the broader natural gas market, growth prospects are strong, as its 200,000 standard cubic meter per day (scmd) mini-LNG plant is set to commence operations from April 2026, with phased capacity growth to 400,000 scmd in 2027.
GLNG SPV is also diversifying into other alternative energy business in the near term, which rating analysts think should further support strong revenue prospects and an enhanced market position.
“Our earnings profile assessment is based on strong earnings growth prospects from the LNG business. Following revenue growth of 34.4% to NGN39.8 billion in financial year 2025 which ended 31 March 2025 (financial 2025), revenue fell below expectations in the last 9 months to December 2025 (Q3 2026) due to heightened competition from other CNG players and pipeline gas suppliers.
“Revenue was further impacted by the appreciation of the Naira against the USD, as gas invoices are indexed to the USD. Notwithstanding the recent underperformance, the group has sustained the EBITDA margin at a fairly strong band of 20-25% over the last two years, underpinned by its flexible pricing model and the cost-efficient gas business.
“We expect sizeable revenue growth and margin enhancement going forward as benefits from the LNG business are expected to accrue from financial 2027.
“We have negatively adjusted our risk score for leverage and capital structure to reflect the sharp deterioration in gearing metrics arising from the increase in debt. Gross debt rose to NGN47.9 billion in financial 2025 (2024: NGN9.9 billion), against our expectation of NGN27 billion, and remains high above NGN45 billion as of 3Q 2026.
“The increased debt was utilised to finance the development of its capital-intensive LNG plant. As a result, the net debt to EBITDA ratio weakened to 2.9x in 2025, and further to 4.7x at 3Q 2026, compounded by weak earnings during the period”.
Similarly, operating cash flow coverage of debt has deteriorated below 10% since 2025 (2024:95.9%), due to rising working capital pressure from the expanding business.
Interest coverage reduced to 4x at Q3 2026 versus 6.7x in 2025 on account of the high and expensive debt. We expect the leverage metrics to remain weak at year-end financial 2026 but anticipate a gradual reduction in debt from financial 2027 as earnings and cash flow improve, supporting net debt to EBITDA in the 2.5x-3x band.
Liquidity remains a positive rating factor, with the sources versus uses coverage projected around 2x over the 15-month period to March 2027. This is predicated on strong cash flow expectations from the LNG business, combined with cash holdings of NGN15.5 billion as of December 2025.
“We expect these sources to sufficiently cover maturing debt of NGN8.3 billion, and estimated maintenance capex spend of NGN2.7 billion, as major capex has been completed. We have positively viewed the long-term nature of the group’s debt, which significantly reduces refinancing pressure”, GCR stated.
Ratings note explained that the negative outlook on GLNG SPV reflects GCR’s concerns that the group’s debt rose well above expectations and gearing metrics are now weaker than those consistent with the current rating level.
“While we recognise that debt has been utilised to accelerate capex, maintaining the existing rating depends on strong earnings performance such that gearing metrics strengthen”. AXA Mansard Targets N3.617bn Profit in Six Months
