InfraCredit has announced its inaugural guaranteed bond transaction, successfully connecting infrastructure as an asset class to the long-term local currency debt capital markets in Nigeria.
InfraCredit is an ‘AAA’ rated infrastructure credit enhancement facility established by the Nigeria Sovereign Investment Authority in collaboration with GuarantCo (a Private Infrastructure Development Group company),
A statement on Tuesday explained that with InfraCredit’s guarantee, Viathan Group through Viathan Funding Plc, established a special purpose vehicle to raise the debt capital. It noted that Viathan Group successfully accessed the debt capital markets for the first time by “issuing a N10.0bn 16.0 per cent 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.”
According to the statement, the Viathan bonds would 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 16 institutional investors comprising at least 12 pension funds and two insurance companies, committing a total of N10.5 billion out of the total issue size of N10 billion, translating to a 105 per cent subscription. The Viathan Bonds priced at an 82 basis points premium to the 10-year sovereign benchmark bond using the 60-day yield average adapted for the book-build exercise,” it added.
Furthermore, it revealed that the ‘AAA’ rated bonds would 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.
The net proceeds of the bonds would be utilised by the 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 Chief Executive Officer 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.”
Also speaking, the CEO of InfraCredit, Chinua Azubike said: “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. 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.”