Economy
Fitch Rates Seplat Proposed Dollar-Denominated Bond Issuance
By Dipo Olowookere
Last week, one of the companies listed on the Nigerian Stock Exchange (NSE), Seplat Petroleum Development Company Plc (Seplat) announced its intention to issue five or seven-year Dollar denominated bonds to foreign investors.
The notes would be issue to refinance the company’s debts, a statement signed by the oil firm had disclosed.
With investors gearing up for the exercise, one of the renowned rating agencies in the world, Fitch Ratings, has assigned expected senior unsecured ‘B-(EXP)’/’RR4(EXP)’ ratings to the proposed bond issuance.
This information was made known in a statement issued by Fitch on Wednesday, February 28, 2018, which was obtained by Business Post.
Also in the statement, Fitch assigned an expected Long-Term Issuer Default Rating (IDR) of ‘B-(EXP)’ with a Positive Outlook to Seplat.
According to the rating firm, the expected IDR assumes a successful refinancing in 2018, i.e., issuance of USD-denominated senior notes and signing of a new long-term revolving credit facility (RCF).
The assignment of a final IDR is contingent upon the successful completion of the refinancing, with terms and conditions in line with our current assumptions.
The assignment of a final rating to the notes is contingent upon receipt of final documentation substantially in line with draft documentation reviewed.
The ‘B-(EXP)’ IDR reflects Seplat’s small scale by production and reserves, concentration of onshore exploration and production (E&P) assets in Nigeria (B+/Negative), and the cash flow volatility that has been associated with its operating environment.
Specifically, between February 2016 and June 2017, Seplat’s performance was severely impacted by a militant attack and subsequent prolonged downtime at the Forcados oil pipeline and export terminal. The company also has large, albeit declining, receivables from state-owned Nigerian Petroleum Development Company (NPDC).
The force majeure was lifted in June 2017 and Seplat has been ramping up production at its main asset.
Fitch said the Positive Outlook assigned to Seplat reflects its view that the Amukpe-Escravos oil pipeline, which Seplat anticipates to be fully commissioned and operational in Q318, will somewhat mitigate cash flow volatility by providing a viable alternative export route to Seplat.
The successful completion and start of operations of the Escravos oil pipeline coupled with continued production ramp-up across Seplat’s upstream assets could result in an upgrade of the IDR to ‘B’.
Along with the post-restructuring capital structure, the rating captures Seplat’s financial profile over 2018-2020, with forecast funds from operations (FFO) net adjusted leverage expected to remain comfortably below the 3.5x negative sensitivity.
On the key rating drivers, Fitch said Seplat, as a small E&P company with onshore oil and gas assets in Nigeria, had its full year 2017 working interest (WI) production around 37 thousand barrels of oil equivalent per day (kboepd), split nearly equally between liquids and natural gas.
Its main assets are the Oil Mining Leases (OMLs) 4, 38 and 41, production at which was severely constrained in 2016-1H17 due to the closure of the Forcados oil pipeline and export terminal following an attack.
Fitch forecasts that Seplat will continue ramping up its daily oil and gas output to 68kboepd in 2021, which incorporates our conservative estimate of a 20 percent additional downtime on the management forecasts.
It also believes that even following Seplat’s expected production ramp-up in 2018-2021 it will remain a small E&P company with a significant onshore asset concentration in one country. Its WI production and reserves (end-2016 – 241mmboe of proved or 1P reserves) remain commensurate with the ‘B’ category rating for an E&P company.
Fitch said to avoid a repetition of a prolonged downtime experienced when force majeure was declared on the Forcados oil pipeline and export terminal, Seplat and the Nigerian authorities have been working on a number of security options and alternative export routes.
The Nigerian government has prioritised the completion of the 160kbopd Amukpe-Escravos oil pipeline. Seplat currently expects the pipeline to be fully commissioned and operational in 3Q18.
In addition to the Escravos pipeline, two jetties at the domestic Warri oil refinery have been upgraded to allow exports of 30kbopd gross.
However, this is a more expensive option as barging of crude is required and Seplat plans to use Escravos as the primary crude export route, supported by Forcados and the Warri refinery routes.
“We believe that these measures when fully operational should provide adequate flexible cover for Seplat’s export transportation needs, but nonetheless conservatively model additional downtime of 20% in our forecasts for 2018-2020,” the rating agency said in its report.
It noted that following the resumption of production at OLMs 4, 38 and 41 in June 2017, Seplat’s financial profile has improved materially.
“Our 2017 base case forecasts FFO at $134 million vs. negative $11 million in 2016 and FFO net adjusted leverage of 2.5x vs. 8.5x at end-2016.
“We expect that Seplat will maintain a conservative financial profile over 2018-2020, with positive free cash flow (FCF), FFO adjusted net leverage under 2.5x and interest coverage of at least 3x,” it said.
Seplat’s 2017 gas revenues of $124 million were up 18 percent year-on-year and its daily gas sales averaged 293MMscfd (gross, not WI) in 4Q17. Seplat aims to increase gas supply to the domestic Nigerian market. Its gas processing capacity stands at 525MMscfd, while current wells can deliver around 400MMscfd (gross).
Nigerian gas prices are largely de-linked from oil prices, e.g. while average realised oil prices dropped by 21 percent between 2015 and 2016, gas prices increased by 19 percent. Seplat projects a higher share of gas in its production volumes, from 50 percent in 2017 to 60 percent in 2021.
“We view positively the higher share of gas in the sales mix, as it provides a more stable source of revenues.
However, gas remains the smaller business and is projected to account for less than 25 percent of the company’s gross revenues in 2021. Gas sales are also subject to credit risks and FX risks, as USD-linked payments for gas are made in Naira,” Fitch stated.
The rating company said the senior notes and secured RCF are expected to be issued by Seplat and will benefit from pari-passu upstream guarantees from Seplat West Ltd (contributor to almost 100 percent of consolidated EBITDA in 2017), Newton Energy and Seplat East Swamp Ltd.
The RCF will further benefit from a security package including a pledge over the shares of Seplat West and Newton, thus ranking it ahead of senior notes under our recovery analysis.
The notes benefit from a standard high-yield covenant package including covenants on permitted payments, incurrence of indebtedness and issuance of preferred stock, merger, consolidation or sale of assets, investments, creation of certain liens, pari passu in right of payment, and contain no financial maintenance covenants.
On its key assumptions, Fitch said they were based on Brent price deck of $52.5/bbl in 2018, $55/bbl in 2019 and $57.5/bbl thereafter; successful renewal of licenses for OMLs 4, 38 and 41 that expire in June 2019; domestic gas prices of between $2.5/mscf and $3/mscf, in line with management forecasts; and daily oil and gas production volumes ramping up from about 37kboepd in 2017 to 68kboepd in 2021, including a 20 percent additional downtime on the management forecasts.
Other were Opex (excluding royalties) improving from about $7.5/boe in 9M17 to about $6.5/boe in 2020-2021, 20 percent more conservative than management forecasts; average capex of about $105 million in 2017-2021, in line with management forecasts; and other cash inflows and outflows as projected plus $100 million additional outflows assumed by Fitch in each 2019-2021.
On the assumptions that relate to recovery estimates, Fitch its bespoke recovery analysis considered Seplat’s value on a going-concern basis in a distressed scenario and assumed that the company would keep its operating licenses and would be restructured rather than liquidated.
Fitch also applied a 25 percent discount to the 2017 EBITDA reflecting its view of a sustainable, post-reorganisation level upon which it based the valuation of the company. The discount reflects risks associated with the oil price volatility, potential unplanned downtime and other adverse factors.
In addition, the 4.5x multiple was used to calculate a post-reorganisation enterprise value (EV), reflecting a mid-cycle multiple for oil & gas and metals & mining companies in the EMEA region. This considered that Seplat does not have any unique characteristic that would allow for a higher multiple, such as significant market share, or undervalued assets.
As per Fitch’s criteria, the new and prior ranking RCF is assumed to be fully drawn and it has also taken 10 percent off the EV to account for administrative claims.
The waterfall results in a 100 percent recovery corresponding to a ‘RR1’ Recovery Rating for the RCF. The noteholders could achieve a recovery of 70% (RR3) but are capped at ‘RR4’ (soft cap), in line with Fitch’s criteria as Seplat’s physical assets are located in Nigeria.
Fitch said it expects Seplat’s liquidity to improve post refinancing, supported by positive FCF generation and a manageable maturity profile.
Fitch-projected FCF is around $125 million in 2018 and $66 million in 2019 because as at December 31, 2017, Seplat had the equivalent of $437 million in cash.
By Adedapo Adesanya
The Central Securities Clearing System (CSCS) Plc has declared the first interim dividend in its history after posting its financial results for the first half of 2026, reflecting robust earnings growth, improved operating efficiency and stronger capital market activity.
The board approved an interim dividend of N1.00 per ordinary share for the six months ended June 30, 2026, citing the company’s strong cash generation, resilient balance sheet and confidence in the sustainability of its earnings.
The interim payout represents about 56 per cent of the total dividend of N1.78 per share paid for the 2025 financial year, underscoring its strong earnings momentum while preserving financial flexibility to invest in technology, innovation and future growth.
CSCS recorded one of the strongest financial performances in its history during the review period, with total operating income rising by 92 per cent to N18.51 billion from the corresponding period of 2025.
The growth was driven by higher transaction fee income as capital market activity strengthened, continued expansion in depository services, increased collateral management revenues and stronger contributions from data and technology-enabled services. Investment income also improved as the company optimised its investment portfolio.
Despite the sharp rise in revenue, operating expenses increased by only 38 per cent, reflecting disciplined cost management and the scalability of the company’s business model.
As a result, operating profit surged by 186 per cent to N10.11 billion, while profit before tax climbed by 115 per cent to N13.21 billion. Earnings per share also rose significantly to 190.1 kobo from 109.1 kobo in the corresponding period of 2025.
The organisation also recorded improvements in operating efficiency. Its cost-to-income ratio declined to 45.4 per cent from 63.2 per cent a year earlier, while operating profit margin improved to 54.6 per cent from 36.8 per cent.
According to the company, the results demonstrate not only the benefits of stronger market activity but also the resilience of its operating model and its ability to convert revenue growth into higher profitability, improved shareholder returns and sustainable long-term value creation.
Commenting on the interim dividend, the Chairman of CSCS Plc, Mr Temi Popoola, said the board’s decision reflected confidence in the firm’s financial strength, earnings quality and long-term strategic direction.
He said the strong performance was driven not only by increased market activity but also by sustained improvements in operational efficiency, disciplined cost management and the continued diversification of revenue streams.
Mr Popoola noted that the Board remained committed to balancing shareholder returns with investments in technology, innovation, resilience and new growth opportunities that would strengthen CSCS’ position as Nigeria’s leading financial market infrastructure and one of Africa’s foremost post-trade institutions.
The chief executive of CSCS Plc, Mr Shehu Yahaya Shantali, attributed the strong performance to the resilience of the entity’s business model, the dedication of its workforce and the confidence of market participants.
He said the first-ever interim dividend demonstrated the company’s ability to translate strong earnings growth and improved operating efficiency into enhanced shareholder value.
Mr Shantali added that CSCS would continue to strengthen its core market infrastructure, invest in technology and innovation, diversify its revenue base and enhance value creation for stakeholders while supporting the development of Nigeria’s capital market.
By Aduragbemi Omiyale
The national scale long-term issuer rating of Axxela Limited has been upgraded by GCR Rating to A+(NG), just as its short-term issuer rating was affirmed with a stable outlook.
The rating firm upgraded the long-term issue rating for Axxela Funding 1 Plc’s N16.4 billion series 1 senior unsecured bond to A+(NG), while the N11.5 billion series 1 senior secured bond was lifted to A+(NG)(EL).
GCR noted in a note that the actions reflect the leading gas and power portfolio company’s robust business model, strong earnings performance, and sustained financial profile, reinforcing its ability to deliver long-term value while maintaining financial discipline.
Axxela’s recent achievements have been driven by its continued focus on responsible growth, customer satisfaction, and creating lasting value for national development.
“The ratings upgrade by GCR is a strong endorsement of Axxela’s disciplined approach to business. Beyond recognising our financial strength, it reflects the resilience of our business model and the confidence in our strategic direction.
“Over the past few years, we have continued to make significant strides across the business by expanding our natural gas infrastructure, strengthening our operational footprint, advancing our sustainability agenda, and maintaining an unwavering commitment to operational excellence and safety,” the chief executive of Axxela, Mr Moshood Olajide, commented on the development.
As the company continues to advance its long-term growth strategy, the upgraded ratings reinforce confidence in Axxela’s credit profile, financial resilience, and ability to create enduring value for investors, customers and other stakeholders.
By Adedapo Adesanya
The Ministry of Solid Minerals Development and the National Identity Management Commission (NIMC) have strengthened their partnership to deploy digital identity technology, aiming to combat illegal mining and enhance security in Nigeria’s mining sector.
Speaking while receiving the Director-General and management of NIMC on a courtesy visit to his office in Abuja, the Minister of Solid Minerals Development, Mr Dele Alake, described the commission as a critical institution in Nigeria’s development architecture, stressing that effective governance could not be achieved without a credible identity management system.
“NIMC occupies a critical position in translating policy into reality. It is pivotal to the development of any nation because governance today is driven by data, technology and credible identity systems,” he added.
He noted that inadequate identification systems had weakened enforcement efforts over the years, allowing illegal mining activities to flourish in mineral-rich communities.
“Without identification, we cannot trace or track, and insecurity will flourish. In the solid minerals sector, we need effective monitoring of both legal and illegal operations.
“A credible identity ecosystem will strengthen regulation, improve enforcement and support our efforts to sanitise the sector,” Mr Alake said.
The minister identified technology, statistics, data gathering and digital identity as critical enablers for evidence-based policymaking, improved regulatory oversight, efficient licensing, investment promotion and national development.
On her part, the DG of NIMC, Mrs Abisoye Coker-Odusote, highlighted several opportunities for collaboration between both institutions, noting that the newly enacted NIMC Act has positioned Nigeria to fully embrace a digital governance ecosystem.
She explained that deeper integration of identity management into the solid minerals sector would facilitate database integration across government institutions, enhance regulatory compliance, strengthen security and law enforcement, improve monitoring of operators, and provide stronger support for the implementation of Community Development Agreements (CDAs) in mining host communities.
Mrs Coker-Odusote added that NIMC’s upgraded digital infrastructure is capable of supporting government institutions in building reliable databases, improving transparency and delivering more efficient public services.
Both institutions said they would immediately begin implementing technology-driven initiatives under the partnership, expressing confidence that expanding access to trusted digital identities for miners and other eligible residents would enhance accountability and strengthen governance in the solid minerals sector.
