CERPAC Receivables Funding SPV Plc. (CRFS), under its Future Flow Securitisation of Expatriate Receivables has paid its second scheduled Semi-Annual payment for the N4.877billion discrete and the N12.5billion Series 1 Bonds, as well as the first scheduled Semi-Annual payment for the N1.6billion Series 2 Bonds. All payments constitute interest and principal due as of the 15th of January 2019. Following these payments, the aggregate principal outstanding for all the Bonds currently stand at N4.21billion, N10.99billion, and N1.49billion respectively. At the time of closing the transactions, the discrete, Series 1 and Series 2 bonds were priced at 18.25%, 15.25%, and 15.50% respectively. The bonds were fully subscribed.
The Future Flow Securitisation of Expatriate Receivables is one of the successful Securitisation transactions in the Nigerian capital market following FMBN Mortgage Backed Securities (MBS) Series 2 & 3 bond issuances and Nigeria Mortgage Refinance Company (NMRC) bond issuances for which Dunn Loren Merrifield Advisory Partners acted as the soles Arranger/Issuing House for each of the bond issuances.
CERPAC Receivables Funding SPV Plc is sponsored by Continental Transfert Technique Limited (CTTL) who also plays the critical role of Servicer under the transaction. CTTL specialises in secure systems integration, leveraging expertise in biometric technology. It is part of a larger combination of companies all under the Contec Global Group; a company with long operational track records in several developing countries, and a broad offering of products and services, including energy, hospitality, agriculture/commodity trading, information technology, and car manufacturing (among others). CRFS benefits from strong cash flow accruing from a long-term contractual arrangement with the Federal Government of Nigeria under the Combined Expatriate Residence Permit and Alien Card (CERPAC).
Outlook
CRFS underlying cash flows is expected to improve on the back of the recent increase in the price of the Combined Expatriate Residence Permit and Aliens Card (Green cards) from USD1,000 to USD2,000 per annum. With the new price, fund allocable to CERPAC is expected to improve significantly. This should enhance the overall credit profile of the Issuer, cash cover and performance of the bonds as a result of the expected increase in cashflow going forward.
At the time of closing of the transaction, Global Credit Ratings accorded the Sponsor/Servicer a long term and short-term national scale ratings of BBB+(NG) and A2(NG) respectively, with a stable outlook. The securitisation transaction was assigned a rating of AA-(NG) by the three rating agencies: GCR[i], Agusto & Co. and DataPro, representing four notches above the sponsor’s (CTTL) rating.
A higher servicer rating is expected to emerge in the medium term should the bonds performance improve and CTTL improves its financial profile such that the operating cashflow/interest and debt service cover ratio increases on a sustained basis than earlier projected.
[i] Please note that GCR’s rating is currently under review pending execution and perfection of initial security documents for the bonds. This is currently ongoing by the trustees.