MIXTA NIGERIA N9.83 billion Series 5 Commercial Paper.
In June 2018, Mixta Real Estate PLC issued N9.83billion Series 5 Commercial Paper under the N10,000,000,000 Commercial Paper Programme. Market timing and appropriate pricing were crucial to the launch of the offer, given expectation of decline in interest rates and investors’ preference for longer tenor instruments. The CP issuance afforded Mixta the opportunity to manage it’s finance cost amidst market volatilities.
Mixta Real Estate: ₦4,500,000,000 17% Series 1 Senior Guaranteed Fixed Rate Bonds due 2022 issued at par
FBNQuest Merchant Bank successfully led a consortium of five (5) issuing houses to arrange, structure, and issue a N4.5billion fully guaranteed corporate bond for Mixta Real Estate PLC (“Mixta Nigeria”). With 100% guarantee of Principal Amount and a coupon payment by GuarantCo Limited, the bond was assigned ‘Aaa’ rating by Agusto & Co, reflecting significant enhancement on the company’s credit rating given that GuarantCo’s rating is 10 notches above the Nigeria sovereign foreign currency issuer default rating. Mixta Nigeria has a strong track record of delivering over 3,000 real estate units to end-buyers in Nigeria, and has recently revised its strategy to focus on the affordable homes segment. The transaction enabled the Company to finance ongoing real estate projects, refinance bank obligations and elongate term maturity of obligations to match tenor of its projects.
Mixta Nigeria is a debut issuer in the debt capital markets and sought to issue a bond at a time when the economy was in recession. The non-familiarity of investors with the company, its business strategy and apathy for real estate projects in the midst of the recession particularly created structure and marketing challenges for the company. These challenges where recognised early in the transaction, and given the envisaged timeline to completing the bond issuance, FBNQuest Merchant Bank provided a bridge finance to Mixta Nigeria to enable the Company commence its strategic initiative of investing in affordable housing projects while simultaneously progressing with the bond structuring work stream. Following a review of the Company’s prospects, identified projects and financial projections, the bond was sculpted to match the cash flow projections with two year
moratorium on principal repayments. To provide comfort to investors, FBNQuest Merchant Bank introduced the guarantee structure provided by GuarantCo and assisted Mixta Nigeria through the due diligence process and to review and negotiate the guarantee terms.
A road show was organised to engage in one-on-one discussions with Pension Fund Administrators and Asset Managers in Lagos and Abuja, and while also maintaining telephone conversation with investors to provide clarifications and required information. The Series 1 offer was successfully concluded in January 2017.