InfraCredit, a ‘AAA’ rated infrastructure credit enhancement facility established by the Nigeria Sovereign Investment Authority (NSIA), in collaboration with GuarantCo (a Private Infrastructure Development Group company), has announced its inaugural guaranteed bond.
The group said in a statement that the transaction is aimed at successfully connecting infrastructure as an asset class to the long-term local currency debt capital markets in Nigeria.
With InfraCredit’s guarantee, the Viathan Group, through Viathan Funding Plc, a special purpose vehicle established to raise debt capital, successfully accessed the debt capital markets for the first time by issuing a N10billion 16.0% Series 1 Senior Guaranteed Fixed Rate Bond Due 2027 (the “Viathan Bonds”).
The Viathan Bond will be the first corporate infrastructure bond issued in the Nigerian debt capital market with a tenor of 10 years, extending the yield curve for corporate debt issuances.
By leveraging on InfraCredit’s financial strength and high credit ratings, the Viathan Bonds was subscribed by 16 institutional investors. They comprise at least 12 pension funds and two insurance companies, committing a total of N10.5billion of the total issue size of N10billion, translating to a 105 per cent subscription.
The Viathan Bonds priced at an 82bps premium to the 10-year sovereign benchmark bond (NIGB 16.288 03/17/2027 Govt) using the 60-day yield average adapted for the bookbuild exercise.
The ‘AAA’ rated bonds will be listed on FMDQ OTC Securities Exchange.
Viathan Group develops and operates captive and embedded (off-grid) power solutions for governmental, commercial and residential off-takers across Nigeria, using natural gas as fuel with a combined generation capacity of 50MW.
Nigeria’s aggregate electricity need has been estimated at about 160,000 megawatts (MW) to satisfy local electricity demand. With an installed capacity of 12,132MW, only an estimated 7,000MW is operational. Of these, between 3,000MW and 5,000MW are actually being generated due to gas shortages, breakdowns, water shortage, and grid constraints, which have led to acute shortage of power across the country.
Nigeria’s transmission grid is estimated to cover a maximum 40 per cent of the country, with annual self-generating capacity outside the national grid put at over 15,000MW.
As a result, the net proceeds of the Bond will be utilised to expand generation capacity by 7.5MW, construct a 104,800 scm/day Compressed Natural Gas (CNG) Plant, and refinance short term bank debts.
By Mathias Okwe
The Guardian Newspaper January 5th, 2018