Announcements Corporate Indicative Rating Actions Rating Alerts

GCR Accords an Indicative Rating of BBB+(NG) to Proposed C&I Leasing Plc’s Series 2 Bonds.

Lagos Nigeria, 15 January 2021 — Global Credit Ratings has accorded an indicative national scale rating of BBB+(NG) to proposed C&I Leasing Plc’s Series 2 Senior Secured Bonds, with the outlook accorded as Negative. The report is valid until May 2021.

RATING RATIONALE

Global Credit Ratings (“GCR”) has accorded the above credit rating to C&I Leasing Plc’s Series 2 Senior Secured Bonds (“Series 2 Bonds”), based on the following key criteria:

The Series 2 Bonds are the second series of bonds to be issued under the N20bn Debt Issuance Program (“DIP”) embarked upon by the Issuer in 2018. The Issuer was authorized, through an enabling resolution of its Board of Directors, to issue the fixed rate redeemable Bonds by way of a book build within such periods and under different terms and conditions as the company may deem appropriate. The first series of bonds issued under the DIP (Series 1 Bonds), issued in 2018 constituted senior secured obligation of the Issuer. C&I Leasing Plc (“the Issuer”) raised the sum of N7bn through the Series 1 Bonds, with N4.8bn being the outstanding balance on the principal as at November 2020. On the other hand, the Series 2 Bonds is being proposed for a seven-year period, with a two-years moratorium on principal. The Series 2 Bonds will constitute direct, senior, secured and unconditional obligations of the Issuer, and rank pari-passu without preference with other outstanding senior secured obligations of the Issuer (existing and future).

The Issuer is a leading brand in the equipment leasing and logistics sector in Nigeria, underpinned by its wide market coverage and entrenched experience. Global Credit Rating Company Limited affirmed the long-term national scale rating of C&I as BBB(NG) in October 2020; with the outlook accorded as Negative.

The indicative rating of the Series 2 Bonds is derived by applying a notching approach, starting from the unsubordinated unsecured credit rating of the Issuer. The accorded indicative rating reflects the unsubordinated and secured nature of the Bonds to be issued, which will rank at par with all senior secured indebtedness of the Issuer. Accordingly, the Series 2 Bonds have been accorded an indicative, public national scale long-term rating of BBB+(NG), which is one notch higher than the unsubordinated unsecured credit rating of the Issuer, based on the estimated “Good Recovery Prospects” of the Security in an enforcement scenario, based on the recovery rate calculations on page 3 of this report relying on the covenant by the Issuer to secure from the relevant third-party, a deed of release in respect of the encumbered vessels on the date of repayment of all outstanding obligations to the third party.

A legal opinion from the solicitor to the Trustees (G.Elias & CO.) of the Series 2 Bonds confirms that the transaction documents are legal, valid, binding and enforceable against the Issuer by third parties and any insolvency official. Also, the security deed is stated to be enforceable notwithstanding the bankruptcy or insolvency of the Issuer.

While a positive movement in the rating of the Issuer could trigger a positive rating action, a significant change in the final transaction structure, non-compliance with covenants, and/or a downgrade of the Issuer’s rating, would trigger a negative rating action.

NATIONAL SCALE RATINGS HISTORY

Initial/last rating (December 2020)

Long-term: BBB+(NG)

Rating outlook: Stable

ANALYTICAL CONTACTS

Primary Analyst

Funmilayo Abdulrahman

Senior Analyst

funmilayo@gcrratings.com

Committee Chairperson

Dave King

APPLICABLE METHODOLOGIES AND RELATED RESEARCH

Global Criteria for Rating Corporate Finance and Leasing Companies, updated March 2017

Global Master Criteria for Rating Corporate Entities, updated February 2018

C&I rating report 2020

Glossary of Terms/Ratios, February 2017

RATING LIMITATIONS AND DISCLAIMERS

ALL GCR CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS, TERMS OF USE OF SUCH RATINGS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS, TERMS OF USE AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://GLOBALRATINGS.COM.NG/UNDERSTANDING-RATINGS. IN ADDITION, RATING SCALES AND DEFINITIONS ARE AVAILABLE ON GCR’S PUBLIC WEB SITE AT HTTP://GLOBALRATINGS.COM.NG/RATINGS-INFO/RATINGS-SCALES-DEFINITIONS. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. GCR’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE AT WWW.GLOBALRATINGS.COM.NG

SALIENT FEATURES OF ACCORDED RATINGS

GCR affirms that a.) no part of the rating process was influenced by any other business activities of the credit rating agency; b.) the ratings were based solely on the merits of the rated entity, security or financial instrument being rated; c.) such ratings were an independent evaluation of the risks and merits of the rated entity, security or financial instrument; and d.) the validity of the ratings is for a maximum of 12 months, or earlier as indicated by the applicable credit rating document.

The ratings were solicited by, or on behalf of, C&I Leasing Plc, and therefore, GCR has been compensated for the provision of the ratings.

C&I Leasing Plc participated in the rating process via face-to-face management meetings and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.

The credit ratings above were disclosed to C&I Leasing Plc.

The information received from C&I Leasing Plc to accord the credit rating included the C&I Leasing Plc’s 31 December 2019 audited annual financial statements (plus four years of comparative numbers), the unaudited management accounts of C&I Leasing Plc for 6 month period (up to June 2020), the draft Programme Trust Deed, the draft Series 2 Trust Deed, the draft Shelf Prospectus for the Programme, the draft Series 2 pricing supplement, the draft Security Deed, and the Certificate of Value of security assets.

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ALL GCR CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS, TERMS OF USE OF SUCH RATINGS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS, TERMS OF USE AND DISCLAIMERS BY FOLLOWING THIS LINK:HTTP://GCRRATINGS.COM. IN ADDITION, RATING SCALES AND DEFINITIONS ARE AVAILABLE ON GCR’S PUBLIC WEB SITE AT WWW.GCRRATINGS.COM/RATING_INFORMATION. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. GCR's CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THIS SITE.

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