Economy
GCR Affirms A-(NG) Rating on Transcorp Hotels
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.
By Adedapo Adesanya
Despite signs that Nigeria’s headline inflation is easing, rising food prices continue to threaten the country’s inflation outlook, the chief executive of the Centre for the Promotion of Private Enterprise (CPPE), Mr Muda Yusuf, has warned.
He noted that structural inflationary pressures in the real economy remain pronounced despite improving macroeconomic stability.
In a policy brief released following the inflation report, he noted that headline inflation eased marginally, while month-on-month change moderated from 1.75 per cent to 1.66 per cent, indicating that headline inflation has largely plateaued.
According to him, the dominant concern in the latest inflation report is the renewed acceleration in food inflation.
This growth, he said, suggested that food prices have resumed an upward trajectory after a brief period of moderation.
Warning that a renewed increase in food inflation has significant economic and social implications, he stressed that food inflation remained the biggest driver of Nigeria’s cost-of-living crisis, stressing that rising food prices continue to erode household purchasing power, worsen poverty and food insecurity while weakening the inclusiveness of the current reform programme.
He maintained that sustained moderation in food prices is critical to improving citizens’ welfare and strengthening public confidence in the ongoing economic reforms.
Acknowledging the easing of core inflation as encouraging, he drew attention to the persistence of urban inflation.
At 16.08 per cent, urban inflation exceeded the national headline inflation rate of 15.91 per cent, while month-on-month urban inflation increased from 1.99 per cent to 2.13 per cent.
According to Mr Yusuf, the figures indicated that inflationary pressures remained particularly intense across urban centres.
He attributed the rising urban inflation partly to increasing population displacement from rural communities affected by insecurity, expressing worry that as more households migrate to urban areas, demand for housing, transportation, utilities and other essential services would increase, adding to inflationary pressures and creating additional urbanisation challenges.
Addressing insecurity in farming communities, he said, was important not only for protecting lives and property and boosting agricultural output but also for easing cost pressures in urban centres, adding that the June CPI data reinforced the view that Nigeria’s inflation challenge is predominantly structural rather than monetary.
On the monetary policy outlook, he said the data do not justify further monetary tightening, arguing that headline inflation has largely stabilised.
The CPPE chief expected the Monetary Policy Committee (MPC) to retain the current monetary policy rate at its next meeting, adding that the priority is for monetary and fiscal authorities to work together to accelerate structural reforms to expand food supply, improve logistics, reduce energy and production costs, lower debt service costs, as well as strengthen domestic value chains.
By Aduragbemi Omiyale
Additional shares of Sterling Financial Holdings Company Plc have been listed on the Nigerian Exchange (NGX) Limited.
The new equities were added to the company’s existing stocks on Customs Street on Thursday, July 16, 2026, a notice from the bourse confirmed.
Business Post reports the total new ordinary shares of Sterling Holdings listed yesterday were 13,812,239,000 units.
They were from the offer for subscription of 12,581,000,000 ordinary shares of 50 Kobo each sold for N7.00 per share, which was oversubscribed by investors.
The financial institution brought the new shares to the stock exchange to increase its total issued and fully paid-up shares to 65,929,251,414 ordinary shares of 50 Kobo each from 52,117,012,414 ordinary shares of 50 Kobo each.
“Trading licence holders are hereby notified that an additional 13,812,239,000 ordinary shares of 50 Kobo each of Sterling Financial Holdings Company Plc were on Thursday, July 16, 2026, listed on the daily official list of Nigerian Exchange Limited.
“The additional shares listed on NGX arose from the company’s offer for subscription of 12,581,000,000 ordinary shares of 50 Kobo each at N7.00 per share.
“With the listing of the additional shares, the total issued and fully paid-up shares of Sterling Financial Holdings Company Plc have now increased from 52,117,012,414 to 65,929,251,414 ordinary shares of 50 Kobo each,” the notice read.
By Adedapo Adesanya
President Bola Tinubu has signed a Presidential Executive Order on Virtual Assets Coordination, establishing a new framework to coordinate the regulation of virtual assets across government agencies as Nigeria seeks to curb fraud while supporting innovation in the digital economy.
The Executive Order, which takes immediate effect, creates a Virtual Asset Council chaired by the Central Bank of Nigeria (CBN) to harmonise oversight of cryptocurrencies, tokenised assets, stablecoins, and other digital assets without creating a new regulator.
As part of the new framework, the CBN will establish a regulatory sandbox that will allow eligible firms to test virtual asset products, blockchain solutions, and related services under regulatory supervision before they are introduced to the wider market.
The development was disclosed in a statement issued on Friday by the President’s Special Adviser on Information and Strategy, Mr Bayo Onanuga.
According to the presidency, the Executive Order responds to the growing complexity of virtual assets, which increasingly cut across the traditional boundaries of currencies, securities, commodities, and payment systems.
The fragmented regulatory environment has left gaps that have exposed Nigeria to money laundering, terrorism financing, cybersecurity and data privacy risks, fraud, and revenue losses.
The government said some unregistered operators have exploited these regulatory gaps to defraud unsuspecting Nigerians, resulting in significant financial losses.
“The Order is designed to close these gaps through supervisory coordination, without introducing new layers of regulation or displacing the mandates of existing agencies,” the statement read.
Under the new framework, the Virtual Asset Council will be chaired by the CBN, with the Nigeria Revenue Service (NRS) and the Securities and Exchange Commission (SEC) serving as vice chairs. Other members include the Nigerian Financial Intelligence Unit (NFIU) and the Office of the National Security Adviser (ONSA).
The Council will provide policy direction, improve cooperation among participating agencies, and work with the Attorney General of the Federation to develop a harmonised legal and institutional framework for the sector.
The Executive Order also establishes a Virtual Asset Office, which will serve as the Council’s operational arm. The office will be domiciled at the CBN and will coordinate information sharing, applications, and reporting among the participating agencies through a shared supervisory technology platform.
The presidency stressed that the Executive Order does not create a new regulator or transfer statutory powers from existing agencies, clarifying that instead, each institution will continue to exercise its existing mandate while working within a coordinated framework.
Under the arrangement, registration of virtual asset businesses will depend on the nature of the service being offered.
Activities classified as securities will continue to be regulated by the SEC, while payment, settlement, custody, and other services involving non-security virtual assets will fall under the CBN.
Where there is uncertainty over regulatory jurisdiction, the Virtual Asset Council will determine the appropriate supervising agency.
“The sandbox will provide a controlled environment in which eligible operators can test and operate virtual asset products, services, and blockchain-based solutions under close supervision, enabling the participating agencies to assess the implications for monetary sovereignty, financial stability, market integrity, consumer protection, financial inclusion, and revenue administration before products reach the wider market,” the statement added.
According to the presidency, the sandbox will enable regulators to evaluate the implications of emerging products for financial stability, monetary sovereignty, consumer protection, financial inclusion, market integrity, and revenue administration.
The central bank is expected to announce further details of the sandbox.
