Presco’s N30bn Unsecured Bond Gets Indicative Rating
GCR Rating has assigned a national scale long term indicative rating of A-(NG) (IR) to Presco Plc.’s proposed up to N30 billion Series 1 Senior Unsecured Bond, with the outlook accorded as stable, according to a statement.
The indicative rating assigned to the proposed unsecured Bond reflects the long-term rating of the Issuer, a leading Nigerian palm oil producer, GCR said, noting that the rating balances Presco’s robust earnings trajectory, moderate gearing, and strong competitive position in the Nigerian palm oil production segment against the weaker assessment of its parent, Siat NV Belgium.
Presco Plc is in the process of registering a N50 billion Bond Issuance Programme with the Securities and Exchange Commission, with up to N30 billion expected to be issued in Series 1 Bond under the Programme, with an expected tenor of seven years, inclusive of a three-year moratorium on the principal amount from the issue date, GCR said in a rating note.
It stated that the Series 1 Bond will feature a call option whereby the Issuer may elect to effect early redemption of the Bonds, either in part or in whole, from the expiration of 48 months from the issue date, in accordance with the provisions of the Series 1 Trust Deed.
The principal redemption on the Series 1 Bond will be on an amortised basis, following the principal moratorium period or upon a call, while coupon payment will accrue from the issue date and be due and payable semi-annually in arrears, up to and including the maturity date, according to GCR.
“The Series 1 Bonds will be direct, unconditional, senior, unsubordinated, and unsecured obligations of the Issuer and rank pari passu without any preference among themselves.
“The Bonds also rank pari passu with all other senior unsecured and unsubordinated obligations assumed by the Issuer other than those mandatorily preferred by law. Read: Presco’s Earnings Growth Debut Clouded by Liquidity Concern
“Being senior unsecured debt, the proposed Series 1 Bonds will rank pari passu with all other senior unsecured creditors of the Issuer.
“As such, 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”, GCR stated.
The rating note explained that the stable outlook accorded to Presco reflects GCR’s view that Siat NV will sustain the recent return to profitability and stable cash flows and meaningfully reduce debt.
GCR also expects that Presco will continue to demonstrate strong revenue growth and robust margins, which should cushion the spike in debt. #Presco’s N30bn Unsecured Bond Gets Indicative Rating
