Johannesburg, 8 May 2014 — Global Credit Rating Co. (Pty) Ltd (‘GCR’) has accorded indicative, public short term ‘A1+(ZA)(sf)’ and long term ‘AA(ZA)(sf)’ credit ratings with a Stable Outlook to the following debentures to be issued by iNguza Investments (RF) Limited (the ‘Issuer’) on 8 May 2014 (the ‘Transaction’):
• R150m Senior Secured Fixed Rate Notes due 8 May 2015, stock code INGR04 (the ‘INGR04 Notes’).
The INGR04 Notes will be issued under a ‘sub-programme’ of the ‘iNguza Investments Note Programme’ referred to as the Renewable Energy Transaction. The INGR04 Notes reference a portfolio of term loans advanced to South African Renewable Energy Project Companies meeting the eligibility criteria of the Renewable Energy Portfolio (the ‘Underlying Security’). The Issuer and FirstRand Bank Limited (‘FRB’) acting through its Rand Merchant Bank division (‘RMB’) have entered into a guarantee agreement pursuant to which RMB, in its capacity as Guarantor, irrevocably and unconditionally guarantees the proper and timely payment of all amounts due and payable under the INGR04 Notes to the Noteholders. The rating of the INGR04 Notes look through to the short and long term credit ratings of FRB in its capacity as the Guarantor on the INGR04 Notes. The INGR04 Notes will also benefit from the liquidity that will be provided by RMB through an irrevocable Balancing Note Subscription Agreement. The Balancing Note Subscription Agreement will ensure that the Issuer has sufficient liquidity to pay the principal and interest on the INGR04 Notes in the event that the Issuer has not received enough funds from the Underlying Security on any payment date or if the Issuer is not able to rollover the INGR04 Notes on the maturity date. The Issuer will also benefit from an irrevocable Put Option that will be provided by RMB. The Put Option will allow iNguza Investments to sell any defaulted asset back to FRB.
The rating accorded to the Notes relates to timely payment of interest and principal. The rating excludes an assessment of the ability of the Issuer to pay any (early repayment) penalties. If the ratings of FRB changes, the ratings of the Notes may also change. Since RMB performs several supportive functions to the Transaction, including being the Balancing Note Subscriber, Guarantor, Put Option Provider, Swap Counterparty and Account Bank, the rating of the INGR04 Notes thus may also change if the rating of RMB is not considered to be of sufficient credit quality anymore and no appropriate remedial action is undertaken when necessary. For more information on the Transaction please read the Renewable Energy Portfolio – INGR04 Transaction Prefunding Report published on 8 May 2014.
Structured Finance Analyst
+27 11 784 1771
Sector Head: Structured Finance Ratings
+27 11 784 1771
APPLICABLE METHODOLOGIES AND RELATED RESEARCH
Global Credit-Linked Note and Repackaging Vehicle Rating Criteria.
Global Master Criteria for Rating Banks and Other Financial Institutions.
FirstRand Bank Limited Rating Report (November 2013).
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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 being rated; 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 earlier as indicated by the applicable credit rating document.
The Arranger participated in the rating process via face-to-face meetings, teleconferences and other written correspondence. Furthermore, the quality of info received was considered adequate and has been independently verified where possible.
The credit rating/s has been disclosed to the Arranger with no contestation of the rating.
GCR has received audited financial statements of the Issuer for the year ended 30 June 2013, executed copies of the Balancing Notes Subscription Agreement, FRB Put Option Agreement, FRB Guarantee Agreement, Balancing Notes Applicable Pricing Supplements and the INGR04 Notes Draft Applicable Pricing Supplements.
The ratings above were solicited by, or on behalf of the rated client, and therefore, GCR has been compensated for the provision of the ratings.