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C&I Leasing to float N10b bond, bags two ratings

By on March 21, 2011

AGUSTO & Co, a leading rating agency in Nigeria and Global Credit Rating Co. (GCR), have both affirmed respectively the Bbb + rating and both A and BBB ratings on C& I Leasing, even as the firm warms up for its N10 billion bond offering in the country.

According to Agusto and Co, the rating came because, there was remarkable improvement in the company’s profitability, which was dependent on additional business volumes from higher margin operating lease assets of the company, adding that the company’s strengths in the areas of good capitalisation and experienced management team contributed to the company’s rating.

It, however, opined that improving profitability, high cost of income and further enhancement of risk management framework are issues that might pose a challenge to the company in years to come.

The rating firm also said a plus added to a rating indicates that the rating may be raised, a minus means that the rating may be lowered, but when no plus or minus is added to the rating, this means that the rating is unlikely to change.

Explaining its own rating, GCR stressed that, the A and BBB ratings signifies that the company (C&I Leasing) has adequate claims paying ability. It stressed its protection factors are adequate, adding that, although there has been considerable variability in risk over time due to economic and/or underwriting conditions.

GCR stated that the signing into law of the Nigerian Oil and Gas Industry Local Content Development Bill 2010 further boosted the future prospects for the Nigerian leasing companies. C&I will benefit as one of the major players in the operating lease market segment, leveraging off its technical expertise, efficiency in service delivery and financial flexibility.

According to the rating company, in July 2010, C&I signed a five-year contract (commencing from January 2011) estimated at $50m, with Shell Petroleum Development Company Ltd, for the provision of three new tug boats and two crew boats to support Shell’s crude oil export tanker operations in Bonny, this it stressed would further expand the business of the company.

Meanwhile, both ratings, according to the Group Managing Director, C&I Leasing, Emeka Ndu, were also given, based on the degree and level of credit worthiness, reliability and the going concern the company has exhibited for some period of time.

Ndu, who said the company’s preparing to come up with its bond issuance of N10 billion, stressed that the management integrity, fair share of the leasing market and the management know how was another factor the ratings.

According to him, the N10 billion bond, which would come on sale any moment from now, would be done in two tranches of N5 billion each, adding that, the bond instrument will be rated separately, we expect that it will be higher than the entity rating, “this will increase interest and enhance sales of the bond,” he stressed.

To the Chief Finance Officer, C& I Leasing, Ayo Taire, the ratings, would improve the possibility and access to funding, investors confidence, enhance shareholders value and allows for growth in profitability.

Taire, who was confident about the success of the bond issuing, noted that, important feedback for management, it provides better ground for negotiations by management, it provides a measure to review the limitations imposed by market, industry, and the financial environment.

According to him, the rating is for the period between October 2010 and September 2011.

Source : Guardian