November 23, 2021/GCR Ratings
GCR Ratings (“GCR”) has affirmed the national scale long term Issue rating of BBB+(NG) assigned to the Programme 1 Series 1 and Programme 2 Series 1 Bonds (collectively referred to as the Bonds) Issued by Gombe State Government of Nigeria, with the Outlook accorded as Stable.
| Rated Entity / Issue | Rating class | Rating scale | Rating | Outlook/Watch |
| Programme 1 Series 1 Fixed Rate Bonds | Long Term Issue | National | BBB+(NG) | Stable |
| Programme 2 Series 1 Fixed Rate Bonds | Long Term Issue | National | BBB+(NG) | Stable |
Rating Rationale
Gombe State Government of Nigeria (“Gombe State” or ‘the State”) has raised the following bonds to finance infrastructural development.
- N20bn in Programme 1 Series 1 bonds in 2012 under its N30bn Bond Issuance Programme (“BIP”). However, the N20bn Fixed Rate Bonds were restructured in 2016 to free up cash to meet recurrent expenditure needs of the State due to the constrained operating environment. Consequently, the tenor was extended to 2023 and the interest rate was revised to 16% from the initial 15.5%.
- N5bn in Programme 2 Series 1 Bonds in 2015 under a N10bn Bond Issuance Programme.
The Bonds benefit from an Irrevocable Standing Payment Order (“ISPO”) approved and issued by the Department of Home Finance under the Federal Ministry of Finance as a first line charge upon and payable out of the statutory allocation of Gombe State. The ISPO provides for servicing of coupon and principal payments on the bonds up to and including the maturity date. Accordingly, a three-notch uplift has been applied to the Bonds, starting from the national scale long term Issuer rating of the State. GCR affirmed the national scale long term Issuer rating of BB+(NG) accorded to Gombe State Government of Nigeria in November 2021. Accordingly, a national scale long term Issue rating of BBB+(NG) has been accorded to the Bonds.
Outlook Statement
The Stable Outlook reflects GCR’s view that Gombe State will continue to enjoy strong financial support from the Federal Government of Nigeria.
Rating Triggers
Given that the Bonds ratings are linked to the State’s long-term rating, any change in the rating assigned to the State will directly affect the Bonds ratings. Any perceived deterioration in the funding security offered by the ISPO could also impact the rating on the bonds.
