A South African credit-only micro-finance institution Real People Investment Holdings Ltd, which issued a multibillion bond in Kenya late 2015, has received a negative rating.
Global Credit Ratings (GCR) said it had downgraded the primary and special servicer quality ratings assigned, with the outlook accorded as negative.
“This negative rating action primarily reflects a reduction in the servicer’s financial strength assessment following GCR’s recent downgrade of Real People’s issuer rating to CCC (ZA) from BB+ (ZA),” said GCR in a statement.
“This is due to significant deterioration in the trading results of Real People up to December 31, 2016, and the resultant strong possibility that the group will breach its Capital Adequacy Ratio debt covenant in the near term, and/or fail to meet existing debt obligations,” said GCR.
The company listed on the Johannesburg Stock Exchange in August 2015 issued a Sh1.63 billion bond at the Nairobi bourse with the proceeds expected to further boost the firm’s lending capacity.
The medium-term note launched earlier in the same month targeted retail, high net worth individuals and institutional investors and saw investors take up Sh1.363 billion of five-year fixed rate notes and Sh270.3 million in three year fixed-rate notes.
The first tranche under the Sh5 billion programme was offered in three- and five-year fixed rate note, as per the information memorandum approved by Kenya’s CMA.
NIC Capital was the transaction adviser, PKF the reporting accountants, Coulson Harney the legal adviser, and NIC Bank the registrar and the receiving bank.
The firm started its operations in Kenya in 2006 and has over the years expanded to cover Uganda and Tanzania. From its head office in Nairobi, it serves the region through a network of branches and satellite offices.