Economy

GCR Affirms A-(NG) Rating on Transcorp Hotels

Published

8 years ago

22/09/2017

By Modupe Gbadeyanka

Global Credit Ratings (GCR) has revealed affirming the long term and short term national scale issuer ratings of A-(NG) and A2(NG) respectively, assigned to Transcorp Hotels Plc with the outlook accorded as Stable.

The rating firm noted that concurrently, the national scale ratings accorded to the following bond Issuances were also affirmed: Series 1 N10bn Fixed Rate Bond – A-(NG), Stable Outlook; and Series 2 N9.8bn Fixed Rate Bond – A-(NG), Stable Outlook, pointing out that both the long and short term issuer and bond ratings are valid until August 2018.

GCR, in a statement, said it accorded the above credit ratings to Transcorp Hotels Plc because it remains one of the most prominent hotel brands in the country, benefitting from strong shareholder support and an operational agreement with Hilton International.

It point out that although, earnings derive predominantly from the Abuja hotel, construction of Lagos and Port Harcourt hotels will help to diversify revenue sources over the medium term. In the interim, ongoing refurbishments to the core Abuja hotel should consolidate its leading position in the upper scale market.

The challenging operating environment in 2016 (with the economy in recession), drove a significant decline in tourism and hospitality sector volumes, which severely impacted hotel patronage across the country.

Despite this, and given the fact that some floors were shut for renovation (for a number of months), revenue remained resilient, rising by 10% to N15.3bn in FY16. This was largely attributed to the increased business development and marketing activities, which kept occupancy rates at the hotel around 60% (well above the industry average of 35%), and improved inflows from food and beverage.

However, as economic activity remained sluggish at the start of 2017, with patronage reduced by the closure of the Abuja airport for six weeks, 1H FY17 revenue of N6.2bn evidenced a 23% year-on-year decline and lagged budget on an annualised basis.

Notwithstanding the top line growth, the impact of inflation, as well as the devaluation in the Naira value, led to an increase in both direct costs and overheads (personnel, energy), partly reversing gains reported from the implementation of cost saving measures in FY15. Operating income fell to N4.1bn (FY15: N4.7bn), translating to a 26.8% margin, the lowest over the last five years. With economic challenges persisting, and a further reduction in operating income to N856m at 1H FY17, it appears unlikely that the full year profitability target will be achieved.

Cost overruns on current capex projects (including refurbishment of the Abuja hotel) necessitated additional loans to meet the shortfall in funding. As such, total debt rose by a net N3.6bn to a high N24.2bn at 1H FY17. Whilst gross gearing remained moderate at 47% at 1H FY17 (FY16: 41%), gross debt to EBITDA rose to 891% (FY16: 408%) and net interest coverage was relatively low at 1.1x in FY16.

If persisting, such low debt coverage metrics are not consistent with companies in the ‘A’ band. Despite the economic challenges, THP still reports robust operating cash flows (N1.4bn at FY16 and N2.3bn at 1H FY17), underpinned by a strong cash generation and a favourable working capital position.

However, the continued payment of high dividends amidst falling cash flows and high capex, places additional strain on liquidity.

Given that the Bonds are senior unsecured obligations of the Issuer, the Series 1 and Series 2 Bonds bear the same rating as the Issuer. Any change in the rating assigned to the Issuer will directly affect the Bonds ratings.

Positive rating action is only likely once the current capex programme is successfully completed, with minimum unexpected costs incurred, as well as an improvement in the operating environment. This should translate to improved earnings and also enhance profitability over the medium term. Conversely, persistently weak debt service metrics could result in negative ratings actions. This could be driven by continued weakness in operating performance, or delays and cost overruns related to capex.

Economy

Aradel, Red Star Express, Others Crash NGX by 0.69%

Published

12 minutes ago

19/03/2026

Dipo Olowookere

By Dipo Olowookere

The Nigerian Exchange (NGX) experienced a pullback of 0.69 per cent as a result of profit-taking by investors, with shares in the banking and energy sectors mostly affected.

Data harvested by Business Post showed that the energy index was down by 4.58 per cent during the session, and the banking space lost 2.14 per cent.

They brought down the All-Share Index (ASI) by 1,402.56 points to 201,156.85 points from 202,559.41 points and shrank the market capitalisation by N900 billion to N129.126 trillion from N130.026 trillion.

Customs Street ended in red at midweek despite three of the five key sectors finishing in green. The consumer goods counter expanded by 1.19 per cent, the industrial goods index improved by 0.46 per cent, and the insurance sector grew by 0.43 per cent.

Red Star Express declined by 9.98 per cent to N25.70, Aradel Holdings went down by 9.68 per cent to N1,210.30, Presco lost 9.30 per cent to trade at N1,701.10, Living Trust Mortgage Bank crashed by 8.40 per cent to N4.80, and DAAR Communications dropped 7.50 per cent to end at N1.85.

On the flip side, Secure Electronic Technology gained 10.00 per cent to settle at N1.32, Guinness Nigeria rose by 9.92 per cent to N423.20, John Holt increased by 9.72 per cent to N11.85, Sovereign Trust Insurance surged by 9.57 per cent to N2.06, and Linkage Assurance chalked up 9.33 per cent to trade at N1.64.

Investor sentiment was weak yesterday after the bourse registered 33 price gainers and 38 price losers, indicating a negative market breadth index.

Market participants bought and sold 6.1 billion stocks valued at N130.1 billion in 58,562 deals compared with the 1.8 billion stocks worth N88.1 billion traded in 62,654 deals on Tuesday, representing a shortfall in the number of deals by 6.53 per cent, and a spike in the trading volume and value by 238.89 per cent and 47.67 per cent apiece.

The most active equity on Wednesday was eTranzact with 5.2 billion units sold for N24.3 billion, Wema Bank exchanged 111.4 million units worth N3.1 billion, Coronation Insurance transacted 96.4 million units valued at N303.9 million, Dangote Cement traded 75.2 million units for N56.5 billion, and Access Holdings exchanged 61.5 million units valued at N1.6 billion.

Economy

Naira Reverses Gains at NAFEX, Sheds N8.96 to Quote N1,353/$1

Published

46 minutes ago

19/03/2026

Adedapo Adesanya

By Adedapo Adesanya

The Naira stumbled against the Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Wednesday, March 18, by N8.96 or 0.67 per cent to trade at N1,353.00/$1, in contrast to the previous day’s rate of N1,344.04/$1.

Also, the local currency weakened against the Pound Sterling in the spot market at midweek by N6.06 to sell for N1,801.93/£1 compared with Tuesday’s value of N1,795.87/£1, and lost N4.75 against the Euro to quote at N1,556.22/€1 versus the preceding day’s N1,551.46/€1.

However, the Nigerian currency gained N2 against the greenback yesterday at the GTBank forex desk to close at N1,363/$1 versus the N1,365/$1 it was exchanged for a day earlier, and traded flat in the parallel market at N1,395/$1.

Nigeria’s external reserves fell by $178 million over three consecutive international payments recorded by the Central Bank of Nigeria (CBN), settling at $49.83 billion from $50.008 billion, indicating that there have been some interventions in the FX market for stability and liquidity.

While the wider outlook for the Naira is positive, potential disruptions to global oil supply have increased volatility in energy markets and could spike inflation with higher oil prices.

In the cryptocurrency market, Bitcoin (BTC) slipped below $71,000 on Wednesday as Federal Reserve Chair Jerome Powell flagged rising oil prices amid the war in Iran as a new inflation risk. It sold at $70,538.58.

The US central bank held interest rates steady as expected, but during his post-meeting press conference, Mr Powell acknowledged that the recent surge in energy prices is already feeding into the central bank’s outlook.

He said rising oil prices “for sure showed up” in policymakers’ higher inflation outlook for this year, lifting their forecast to 2.7 per cent from 2.4 per cent.

Further, Ethereum (ETH) lost 6.3 per cent to trade at $2,178.56, Cardano (ADA) fell by 6.1 per cent to $0.2714, Dogecoin (DOGE) dropped 5.7 per cent to close at $0.0096, Solana (SOL) dipped 4.8 per cent to $89.83, Ripple (XRP) slumped by 3.8 per cent to $1.46, and Binance Coin (BNB) declined by 3.7 per cent to $648.61.

However, TRON (TRX) appreciated by 0.4 per cent to $0.3037, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 each.

Economy

Brent Hits $112 as Iran Escalates Attacks on Middle East Energy Facilities

Published

2 hours ago

19/03/2026

Adedapo Adesanya

By Adedapo Adesanya

Brent crude moved higher by 4.27 per cent to $112.00 per barrel on Wednesday as Iran attacked several energy facilities across the Middle East, creating a major escalation in its war with the United States and Israel.

Also, the US West Texas Intermediate grew by 2.73 per cent to $98.95, as the Middle East conflict continues to escalate, and energy infrastructure is targeted across the Gulf, as Iran hit energy infrastructure across the Middle East in retaliation for earlier strikes on its South Pars gas field.

Qatar confirmed that Iranian missile strikes had caused “extensive damage” around the Ras Laffan industrial complex, the world’s largest liquefied natural gas (LNG) facility and a cornerstone of global gas supply.

Meanwhile, the United Arab Emirates (UAE) suspended operations at its Habshan gas facility after missile-related incidents, with debris from intercepted projectiles reportedly affecting additional energy infrastructure, including the Bab oil field.

Saudi Arabia, Kuwait, Iraq, and Bahrain continue to be targeted by Iran, with Saudi Arabia reporting that air defences had destroyed a total of 19 drones in the Eastern Province and four missiles launched toward Riyadh.

Earlier on Wednesday, Iran issued an evacuation warning for ⁠several energy facilities across Saudi Arabia, the UAE and Qatar, saying they would be targeted by strikes “in the coming hours.”

Shipping also remained under threat, with the UK’s maritime security agency reporting that a vessel east of the Strait of Hormuz caught fire after being struck by an “unknown projectile.”

The war has halted shipments via the Strait of Hormuz, which handles 20 per cent of global oil and LNG supply. Total oil output cuts in the Middle East are estimated at 7 million to 10 million barrels per day, or 7 per cent to 10 per cent of global demand.

To ease worries, the administration of US President Donald Trump on Wednesday announced a 60-day waiver of the Jones Act shipping law, temporarily allowing foreign-flagged vessels to move fuel, fertiliser, and other goods between US ports.

It is also working on measures that could help slow the surge in fuel prices in the US, but are unlikely to have much of an effect on global energy prices.

In Iraq, the North Oil Company said crude exports from Iraq’s Kirkuk fields to Turkey’s Ceyhan port ⁠have resumed via pipeline, after Iraq and the Kurdistan Regional Government agreed to restart flows. The company said exports would resume with an initial capacity of 250,000 barrels per day.

The US Energy Information Administration (EIA) said crude inventories rose by 6.2 million barrels to 449.3 million barrels in the week ended March 13.