Economy

GCR Affirms A-(NG) Rating on Transcorp Hotels

Published

9 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

Four Securities Erase N51.17bn from NASD Exchange

Published

1 day ago

27/06/2026

Adedapo Adesanya

By Adedapo Adesanya

Four securities weakened the NASD Over-the-Counter (OTC) Securities Exchange by 1.95 per cent on Friday, erasing N41.17 billion from the bourse, which had its market capitalisation at N2.567 trillion compared with the previous session’s N2.618 trillion.

In the same vein, the NASD Unlisted Security Index (NSI) decreased at the close of business by 85.28 points to 4,277.07 points from 4,362.32 points.

The price decliners were led by 11 Plc, which gave up N20.50 to sell at N200.50 per share compared with the preceding day’s N221.00 per share, FrieslandCampina Wamco Nigeria Plc dropped N16.94 to close at N155.20 per unit versus Thursday’s closing price of N172.14 per unit, Central Securities Clearing System (CSCS) Plc went down by N2.11 to N84.68 per share from N86.79 per share, and Afriland Properties Plc lost 11 Kobo to end at N16.74 per unit, in contrast to the N16.85 per unit it closed a day earlier.

During the trading day, the value of transactions jumped by 172.1 per cent to N29.9 million from the preceding session’s N10.9 million, and the volume of trades soared by 136.5 per cent to 955,096 units from the previous 403,901 units, while the number of deals went down by 11.4 per cent to 31 deals from 35 deals.

Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units worth N6.5 billion, and CSCS Plc with 68.6 million units sold for N4.7 billion.

GNI Plc also ended the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, trailed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.

Economy

Cautious Trading, Profit-taking Weaken Nigeria’s Stock Exchange by 0.66%

Published

1 day ago

27/06/2026

Dipo Olowookere

By Dipo Olowookere

The last trading session of this week on the floor of the Nigerian Exchange (NGX) Limited ended on a negative note, with a 0.66 per cent loss on Friday.

This was influenced by sustained selling pressure and cautious trading, which forced investors into profit-taking.

Data obtained by Business Post showed that the energy sector fell by 4.66 per cent, the insurance counter dipped by 2.23 per cent, the consumer goods index depreciated by 0.96 per cent, and the banking segment shed 0.28 per cent, while the industrial goods space remained unchanged.

At the close of business, the All-Share Index (ASI) of Nigeria’s stock exchange went down by 1,531.81 points to 232,049.02 points from 233,580.83 points, and the market capitalisation dropped N983 billion to settle at N148.905 trillion compared with Thursday’s N149.888 trillion.

Aradel was the worst-performing equity after it lost 10.00 per cent to close at N1,417.50. International Energy Insurance slipped by 9.95 per cent to N5.79, Trans-Nationwide Express depreciated by 9.89 per cent to N3.28, eTranzact crashed by 9.79 per cent to N14.75, and UPDC slumped by 9.72 per cent to N28.12.

The best-performing equity for the day was Universal Insurance, which gained 6.32 per cent to close at N1.01, McNichols grew by 5.52 per cent to N8.60, Linkage Assurance expanded by 4.67 per cent to N1.57, NGX Group appreciated by 4.35 per cent to N120.00, and Transcorp increased by 3.62 per cent to N41.50.

As look at the activity level indicated that investors traded 388.7 million stocks worth N18.4 billion in 44,631 deals compared with the 393.7 million stocks valued at N19.2 billion executed in 45,813 deals a day earlier, representing a decline in the trading volume, value, and number of deals by 1.27 per cent, 4.17 per cent, and 2.58 per cent, respectively.

Economy

Official FX Market Sees Naira Dip to N1,380.93/$1

Published

1 day ago

27/06/2026

Adedapo Adesanya

By Adedapo Adesanya

The Naira recorded a loss of 82 Kobo or 0.06 per cent against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, June 26, exchanging at N1,380.93/$1, in contrast to the previous day’s rate of N1,380.11/$1.

Equally, the domestic currency further weakened against the Pound Sterling in the official FX market yesterday by N6.06 to settle at N1,824.90/£1 versus the preceding session’s N1,818.84/£1, and lost N10.74 on the Euro to sell at N1,577 .58/€1 versus N1,566.84/€1.

At the GTBank forex counter, the Naira depreciated against the greenback during the session by N4 to close at N1,387/$1, in contrast to Thursday’s value of N1,383/$1, and at the parallel market, it was unchanged at N1,395/$1.

Interbank FX activity among financial institutions has fluctuated amid a sharp slowdown in forex market interventions by the Central Bank of Nigeria (CBN), as it allows demand and supply to move the market.

Also, a stronger greenback has generally put significant pressure on emerging-market currencies.

Nigeria has accessed the first tranche of a proposed $5 billion derivatives financing arrangement with First Abu Dhabi Bank PJSC, the largest lender in the United Arab Emirates (UAE).

The $5 billion facility, approved by the National Assembly earlier this year, is part of the federal government’s plan to diversify external financing sources and reduce borrowing costs. Structured as a Total Return Swap with First Abu Dhabi Bank, proceeds are earmarked for refinancing debt and supporting infrastructure financing.

If the proceeds are brought into the country through the official FX market, the transaction will increase the currency reserves or Dollar liquidity.

At the cryptocurrency market, Solana (SOL) grew by 2.2 per cent to $71.92, Cardano (ADA) gained 1.1 per cent to trade at $0.1474, Ripple (XRP) also appreciated by 1.1 per cent to $1.05, Dogecoin (DOGE) expanded by 0.9 per cent to $0.0755, and Ethereum (ETH) improved by 0.4 per cent to $1,578.84.

On the flip side, TRON (TRX) slid 0.6 per cent to $0.3203, Binance Coin (BNB) slumped by 0.3 per cent to $564.33, and Bitcoin fell by 0.2 per cent to $60,219.37, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.