InfraCredit, a ‘AAA’ rated infrastructure credit enhancement facility established by the Nigeria Sovereign Investment Authority in collaboration with GuarantCo (a Private Infrastructure Development Group company), is pleased to announce its inaugural guaranteed bond transaction, successfully connecting infrastructure as an asset class to the long-term local currency debt capital markets in Nigeria.
With InfraCredit’s guarantee, 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 NGN 10.0bn 16.0% Series 1 Senior Guaranteed Fixed Rate Bond Due 2027 (the “Viathan Bonds”) backed by the irrevocable and unconditional guarantee of InfraCredit and accorded ‘AAA’ long term national scale rating by GCR and Agusto & Co.
The Viathan Bonds will be the first corporate infrastructure bonds issued in the Nigerian debt capital markets 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 sixteen (16) institutional investors comprising at least 12 pension funds and 2 insurance companies, committing a total of NGN10.5 billion out of the total issue size of NGN10 billion, translating to a 105% 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 Mega Watts (MW) to satisfy the local electricity demand. With an installed capacity of 12,132 MW, only an estimated 7,000 MW of installed capacity is operational. Of these, only between 3,000 MW to 5,000 MW are actually being generated due to unavailability of gas, breakdowns, water shortage and grid constraints which has led to acute shortage of power across the country. Nigeria’s transmission grid is estimated to cover a maximum 40% of the country, with annual self-generating capacity outside the national grid put at over 15,000 megawatts.
The net proceeds of the Bonds will be utilized by Viathan Group to expand its generation capacity by 7.5MW, construct a 104,800 scm/day Compressed Natural Gas (CNG) Plant and refinance short term bank debts.
Commenting on the development, the CEO of Viathan Engineering Limited, Mr. Ladi Sanni said, “the success of the bond issuance has significant implication for Viathan’s capacity expansion strategy; with 10-year funding at relatively lower borrowing cost, Viathan Group is better positioned to efficiently execute its capacity expansion plan in captive power generation and increase its diversification into gas processing”.
According to the Chief Executive Officer of InfraCredit, Chinua Azubike,” We are pleased to support Viathan Group’s business expansion programme in the captive power market, by enabling them to raise long term local currency funding with favorable terms. The success of our maiden guarantee transaction is a significant milestone, demonstrating strong investor confidence, diverse investor base and market acceptance of our credit standing and ‘AAA’ guarantee. This transaction will create a new investable asset class to match the long-term maturity structure of pension fund and insurance companies’ assets”.
Speaking on the success of the transaction, the Chairman, InfraCredit, Uche Orji said, “the success of this transaction aligns with the overall objective of InfraCredit’s sponsors, the Nigeria Sovereign Investment Authority and GuarantCo, in establishing InfraCredit to serve as a catalyst for facilitating private investment into infrastructure from pension funds and other long-term private institutional investors in order to support sustained economic growth in Nigeria.”
Renaissance Capital (Nigeria) was the Lead Issuing House and Lead Bookrunner for the transaction.
This announcement is for information purposes only. No money, securities or other consideration is being solicited, and, if sent in response to the information contained herein, will not be accepted.
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