Nigeria wealth agency issues N10 billion bond to private firm

The Nigeria Sovereign Investment Authority, NSIA, on Wednesday announced the issuance of N10 billion to a private group to enable it expand its captive electricity generation capacity.

The issue is the first infrastructure bond facilitated by the agency in the country’s debt capital markets.

The inaugural guaranteed bond will connect infrastructure as an asset class to the country’s long-term local currency debt capital markets.

The issue was facilitated by InfraCredit, an infrastructure credit enhancement facility established by NSIA in collaboration with GuarantCo, a private infrastructure development group.

A statement by NSIA sent to PREMIUM TIMES said InfraCredit, along with Viathan Group through Viathan Funding Plc, accessed the 16 per cent Series 1 Senior Guaranteed Fixed Rate bond from the Nigerian debt capital markets. It will become due by 2027.

Viathan Funding Plc is a special purpose vehicle established to raise debt capital, with Renaissance Capital (Nigeria) as the Lead Issuing House and Lead Bookrunner for the transaction.

The bond, the first corporate facility to be successfully accessed from the Nigerian debt market for infrastructure development, has a 10 year tenor, extending the yield curve for corporate debt issuances.

Backed by the InfraCredit irrevocable and unconditional guarantee, the bond is accorded ‘AAA’ long term national scale rating by Global Credit Ratings, GCR, and Agusto & Co.

The net proceeds of the bonds will be utilised by Viathan Group to expand its electricity generation capacity by 7.5MW; construct a 104,800 standard cubic metres per day Compressed Natural Gas, CNG plant and refinance short term bank debts.

The Managing Director of NSIA, Uche Orji, said 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.

Already, the investors’ commitment has exceeded the total issue size (N10 billion) by N500 million.

This translates to about 105 per cent subscription, with the Viathan Bonds priced at an 82 basis points, bps, premium to the 10-year sovereign benchmark bond, using the 60-day yield average adapted for the book-build exercise.

The ‘AAA’ rated bonds would be listed on Financial Markets Dealers Quotations over-the-counter, FMDQ OTC Securities Exchange.

NSIA said 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.

Although Nigeria’s aggregate electricity demand is estimated at about 160,000 MW, the country’s installed capacity stands at just over 12,000 MW.

While the country’s current power generation capacity is estimated at 7,000 MW, only about 5,155 MW is actually available to consumers due to inadequate transmission infrastructure. Nigeria’s transmission grid is estimated to cover a maximum 40 per cent of the country,

Viathan Engineering Limited CEO, Ladi Sanni, said the success of the bond issuance would have significant implications on the group’s expansion strategy, particularly its foray into the development of the country’s power infrastructure.

“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,” he said.

The Chief Executive Officer of InfraCredit, Chinua Azubike, said the company was pleased to support Viathan Group’s business expansion programme in the captive power market, by enabling them raise long term local currency funding with favourable 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,” he said.

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.”