Lagos, 26 September 2018 — Global Credit Ratings has affirmed the final public national scale long term rating of BBB(NG) accorded to Sterling Investment Management SPV PLC’s N7.97bn Series 1 Bonds, issued under Sterling Investment Management SPV PLC N65bn Debt Issuance Programme; with a Stable Outlook. The rating is valid until July 2019.
Global Credit Ratings (“GCR”) has accorded the above final credit rating based on the following key criteria:
The Issuer is a subsidiary of Sterling Bank Plc (“Sterling” or “the bank” or “the Sponsor”), one of the mid-sized commercial banks in Nigeria based on asset size. Sterling has been accorded a long-term national scale credit rating of BBB(NG) by GCR.
The Transaction entails the use of the proceeds of the Sterling Investment Management SPV PLC Series 1 Bonds Issue, which constitute senior obligations of the Issuer, to purchase (with up to 60% of the proceeds) unsecured subordinated notes (“the Subordinated Notes”) of the Sponsor. The remaining portion (40%) of the Issue proceeds, initially held in the Debt Service Reserve Fund (“DSRF”), is to be invested in Federal Government of Nigeria (“FGN”) Securities (collectively the Subordinated Notes and FGN Securities are referred to as ‘Permitted Investments’ (“PI”). All Subordinated Notes’ debt servicing payments received going forward are to be held in the DSRF and used to pay the coupon on the Series 1 Bonds and upon maturity the principal and if able, to purchase further PIs.
The rating of the Series 1 Bonds is supported by the estimated “Good Recovery Prospects” of the PIs in an enforcement scenario. This also takes cognisance of the fact that the investment income from FGN Securities will be retained in the SPV.
According to the Joint Trustees’ performance reports on the Series 1 Bonds (up to 16 August 2018), the Issuer has been meeting its obligations under the Bond Issue timeously so far.
NATIONAL SCALE RATINGS HISTORY
Initial rating (August 2016)
Long term: BBB(NG)
Last rating (September 2017)
Long term: BBB(NG)
Primary Analyst Committee Chairperson
Julius Adekeye Dave King
+23 41 904 9462-3 email@example.com
APPLICABLE METHODOLOGIES AND RELATED RESEARCH
Global Master Criteria for Rating Banks and Other Financial Institutions, updated March 2017
Global Structurally Enhanced Corporate Bonds Rating Criteria, updated November 2017
Sponsor’s rating report (2017)
Glossary of Terms/Ratios (February 2016)
RATING LIMITATIONS AND DISCLAIMERS
ALL GCR’S CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://GLOBALRATINGS.COM.NG/UNDERSTANDING-RATINGS. IN ADDITION, GCR’S RATING SCALES AND DEFINITIONS ARE ALSO AVAILABLE FOR DOWNLOAD AT THE FOLLOWING LINK: HTTP://GLOBALRATINGS.COM.NG/RATINGS-INFO/RATING-SCALES-DEFINITIONS. GCR’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, PUBLICATION TERMS AND CONDITIONS AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE AT HTTP://GLOBALRATINGS.COM.NG.
SALIENT FEATURES OF ACCORDED RATINGS
GCR affirms that a.) no part of the rating was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the rated entity, security or financial instrument; c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial instrument; and d.) the validity of the rating is for a maximum of 12 months, or as indicated by the applicable credit rating document.
The rating was solicited by, or on behalf of, Sterling Investment Management SPV PLC, and therefore, GCR has been compensated for the provision of the rating.
Constant Capital Markets and Securities Limited and Sterling Bank Plc participated in the rating process via face-to-face management meetings, teleconferences and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.
The credit rating above was disclosed to Constant Capital Markets and Securities Limited and Sterling Bank Plc with no contestation of/changes to the rating.
The information received from Constant Capital Markets and Securities Limited and Sterling Bank Plc to accord the credit rating included the Sponsor’s 31 December 2017 audited annual financial statements (plus four years of comparative numbers), Sponsor’s 1H FY18 unaudited results, the Programme Trust Deed for the Debt Issuance Programme, the Programme Shelf Prospectus, the Series 1 Trust Deed, the Series 1 Pricing Supplement, the Master Notes subscription Agreement, as well as Trustees performance report, up to August 2018.