N89.999bn MTN Nigeria Unsecured Bonds Rated AAA
GCR Ratings has assigned a national scale long term Issue rating of AAA (NG) to MTN Nigeria Communications Plc.’s N89.999bn Series 2 Senior Unsecured Bonds, adding that the outlook on the rating is stable.
According to the rating note, MTN Nigeria Communications Plc is the leading domestic provider of cellular telecommunications services, accounting for 37.72% of the Nigerian GSM subscriber base as of 31 December 2021.
It’s trading as a subsidiary of MTN International (Mauritius) Limited, with the ultimate parent company being South Africa based MTN Group, according to the rating note.
GCR said MTN Group has developed into a leading regional cellular telecommunication services provider, with a subscriber base of about 277.3 million across 21 countries in Africa and the Middle East as of end-June 2021.
The telecom giant is viewed as operationally integral to the Group, accounting for 27.4% of its subscriber base, around 32.3% of revenue and 36.3% of group earnings before interest tax depreciation and amortisation (EBITDA) in 2020.
GCR upgraded the national scale long-term Issuer rating of MTN Nigeria to AAA (NG) and affirmed the national scale short-term Issuer rating of A1+ (NG) in June 2021, with the outlook accorded as Stable.
The ratings reflect the Issuer’s very strong competitive position, as well as its strong earnings and cash flow which have supported a robust financial profile.
MarketForces Africa reported that MTN Nigeria registered a N200bn Bond Issuance Programme with the Securities and Exchange Commission in May 2021 and subsequently raised N110 billion in Series 1 Senior Unsecured Bonds under the Programme. In November 2021, the MTN Nigeria raised an additional N89.999 billion in a 12.75% Series 2 Senior unsecured Bond Issue.
The rating explained that the Series 2 Bonds have a tenor of ten years, with maturity in 2031, and a seven-year moratorium on principal repayment, but interest will accrue from the issue date and will be payable semi-annually in arrears.
At the expiration of the seven-year moratorium, principal redemption will be payable annually, amortising over three (3) equal annual instalments, GCR said. Detail shows that the Bonds constitute direct, unsecured, senior and unconditional obligations of the Issuer and shall rank pari-passu among themselves and equally with other existing senior unsecured obligations of the Issuer. GCR said the net proceeds are being utilised to optimise MTN Nigeria’s existing funding mix and finance network expansion.
It said the Programme Trust Deed does not offer the Series 2 Bondholders any security over assets but does feature a negative pledge and other covenants to protect the interest of Bondholders. “Being senior unsecured debt, the Series 2 Bonds rank pari passu with all other senior unsecured creditors of MTN Nigeria.
“As such, the Series 2 Bonds will bear the same national scale long term rating as that accorded to the Issuer. Accordingly, any changes in MTN Nigeria’s long term Issuer rating would impact the Bond rating”. GCR said the stable outlook reflects its view of MTN Nigeria’s leading market position, combined with ongoing capital investments which will allow the Company to maintain its robust earnings and cash flow and further strengthen the financial profile. #MTN Nigeria N89.999bn Unsecured Bonds Rated AAA (NG)
