InfraCredit, GPC energy sign N20bn bond guarantee to up service delivery in Nigeria’s logistics sector
Infrastructure Credit Guarantee Company Limited ( InfraCredit) has signed a bond guarantee with a transport services provider, GPC Energy and Logistics Limited to provide additional services in Nigeria’s logistics sector through the provision of 220 trucks that will create 360 direct and indirect jobs for most Nigerians.
The N20 billion co-guarantees for a 10-year bond represent a partnership with InfraCredit, a Nigeria-based private infrastructure guarantee company and a GPC Energy seeks to provide additional essential transport and logistics services to several multinational companies in Nigeria operating across the FMCG, agriculture and construction sectors.
According to InfraCredit, GPC is a first-time issuer in the debt capital markets, and leveraging on InfraCredit’s guarantee, the 10-year GPC Series 1 Bonds was accorded an ‘AAA’ long term credit rating by Agusto and Co. and DataPro Limited, reflecting the high degree of creditworthiness and the strong quality of the Bonds.
“The success of this financing will provide up to 220 trucks under term contracts that will create 360 direct and indirect jobs,” InfraCredit said.
InfraCredit noted that the Bonds were oversubscribed by 25.3 percent from nine institutional investors including the domestic pension funds.
“The bond proceeds will be used to finance the acquisition of additional trucks to sustain the strong growth trajectory of the company in meeting the burgeoning demand from clients across key growing sectors of the Nigerian economy,” InfraCredit noted.
In addition, part of the proceeds would be used to refinance existing foreign currency-denominated loans, thereby appropriately matching the currency of its revenues to that of its debt obligations.
GPC-SPV Series 1 Bonds were priced off the yield on the comparable FGN Sovereign Bond, therefore providing a unique opportunity for institutional investors to match their long-term liabilities with “AAA”-rated, low-risk assets with appropriate risk-adjusted returns.
Commenting on the recent development, the CEO of GPC Energy and Logistics Limited, Chukwudi Okonji stated that the maiden bond transaction is an important milestone for GPC, as it provides the leverage to finance our next transformational growth phase.
“The success of this transaction reinforces our capacity to enhance service delivery to our growing clientele, who play significant roles across different growth sectors of the Nigerian economy,” Okonji said.
According to the CEO of InfraCredit, Chinua Azubike, “COVID-19 pandemic negatively impacted all transport operations, leading to severe disruptions of supply chains and trade flows worldwide, particularly developing economies like Nigeria”.
“InfraCredit’s guarantee on the GPC Series I Bonds further demonstrates our commitment towards inclusive access to long-term domestic credit to the private sector for infrastructure development and the deepening of the debt capital markets with quality asset classes for local institutional investors,” Azubike said.
Azubike noted that GPC has built a strong brand, reputed for efficiency in the transportation and logistics industry, and we are pleased to support the experienced management in transitioning to the next phase of the company’s growth strategy, particularly given the importance of transportation sector to the recovery and growth of the Nigerian economy.
“The remarkable success of this guaranteed-bond, for a first-time issuer, validates the commitment and appetite of domestic pension funds in financing viable and sustainable infrastructure assets whilst also reinforcing the prospects for the private sector to raise long term local currency finance from the domestic debt capital markets,” Azubike said.