IHS Holding, the largest independent mobile tower infrastructure operator in Africa, last week launched an $800m 5 yr Eurobond, offering a yield of around 9.5 percent, according to data from Bloomberg.
The interesting thing about the offer though was the fact that IHS is rated one notch above Nigeria by S&P Global Ratings.
“Despite the downgrade of Nigeria, published Sept. 16,
2016), our credit assessment on the IHS Holding group is higher than the foreign currency rating on Nigeria because IHS Holding passes our hypothetical sovereign default stress test, which, among other factors, assumes a 50 percent devaluation of the Nigerian naira against hard currencies and a 15 percent-20 percent decline in organic EBITDA. However, because of the group’s large exposure to Nigeria, we cap our rating on IHS Holding, at one notch above our ‘B’ transfer and convertibility (T&C) assessment for Nigeria,” S & P, said in an Oct, 11 note.
Nigeria is currently in the process of raising a proposed $1 billion Eurobond to help finance its budget shortfall.
With IHS being rated above Nigeria, logically it might mean the sovereign will price at a higher yield than IHS.
Nigeria’s dollar bonds however are currently trading closer to 7 percent than 9 percent.
Outlook for whatever issuance Nigeria does will depend on oil prices and the country getting its acts together regarding a lack of clarity for investors around monetary policy.