LFZC Funding SPV Infrastructure Bonds Get AAA(NG)(IR)
GCR Ratings has assigned a national scale long term indicative Issue rating of AAA(NG)(IR) to Lagos Free Zone Company (LFZC) Funding SPV Plc.’s N25 billion Series 2 Senior Guaranteed Fixed Rate Infrastructure Bonds, with the outlook accorded as Stable.
The rating note said the indicative rating will expire the sooner of 30 June 2022 or the issuance date of the Bonds.
LFZC Funding SPV Plc.’s N25 billion Series 2 Bonds are the second series to be issued under the N50 billion Bond Issuance Programme registered with the Securities and Exchange Commission in August 2021.
GCR said the Issuer is authorised by virtue of a resolution of its board of directors dated 1 June 2021 to issue bonds not exceeding the maximum value of the programme. The rating note explained that the Issuer is a special purpose vehicle set-up solely for the purpose of raising finance for Lagos Free Zone Company.
LFZC Funding SPV engages in the development and management of Lagos Free Zone and leasing of the developed land to enterprises registered within the Zone.
Its ultimate parent company, Tolaram Group Inc., a global conglomerate founded in 1948 and headquartered in Singapore, with operations spanning across Europe, Asia, and Africa.
GCR said the Series 2 Bonds shall constitute direct, unconditional, guaranteed, and unsubordinated obligations of the Issuer / Sponsor and Guarantor.
The Bonds have a tenor of 20 years, interest payment shall accrue from allotment date to be paid semi-annually, while principal repayments have a moratorium of 60 months, semi-annually each year commencing from the 66th month after the Issue date until maturity, it said.
The Series 2 Bonds will be fully guaranteed by Infrastructure Credit Guarantee Company Limited, according to the rating note, the company is rated ‘AAA(NG)’ with a stable outlook.
“InfraCredit has agreed to provide an irrevocable and unconditional guarantee in favour of the Guarantee Trustee for and on behalf of the Series 2 Bondholders to guarantee the timely performance of the obligations of the Issuer under the Series 2 Bonds Issue.
“The payment obligations of the Issuer, Co-Obligor and Guarantor in respect of the Series 2 Bonds, shall rank at par with other indebtedness of similar status to the Issuer, the Co-Obligor, and the Guarantor respectively”, GCR stated.
It added that InfraCredit in its capacity as Guarantor shall guarantee the timely payment of both the interest and principal obligations of the Series 2 Bonds.
“Under the Guarantee, if by ten (10) business days prior to the payment date, the payment account has not been funded by the Issuer and/or the Co-Obligor, the Guarantee Trustee is required to issue a Demand Notice to the Guarantor, and InfraCredit is required to fund the payment account with the due amount by the payment date to ensure bondholders are paid.
“The Guarantee will be in force until all payment obligations under the Series 2 Bonds have been fully discharged”, it said.
The rating is underpinned by the uniqueness of InfraCredit’s operations as a credit guarantee provider, its strong capitalisation, liquidity, and asset quality position, albeit counterbalanced by its self-regulated status.
Given that InfraCredit offers timely and full coverage of all payments due under the Series 2 Bonds through the Deed of Guarantee, the Bonds bear the same credit risk as InfraCredit. READ: InfraCredit Guarantees PAT Digital Infrastructure Bonds
As such, the national scale long-term indicative Issue rating of the Series 2 Bonds is equalised with the Guarantor’s national scale long-term Issuer rating. #LFZC Funding SPV Infrastructure Bonds Get AAA(NG)(IR)
