INFRACREDIT AND THE AFRICAN TRADE & INVESTMENT DEVELOPMENT INSURANCE (ATIDI) SIGN LOCAL CURRENCY COUNTER-GUARANTEE AGREEMENT ON PORTFOLIO RISK SHARING OF NGN37 BILLION (US$40.7 MILLION)

InfraCredit, a specialised infrastructure credit guarantee institution in Nigeria and the African Trade & Investment Development Insurance (“ATIDI”), a pan-African multilateral development finance institution that provides risk solutions headquartered in Kenya, have signed a local currency counter-guarantee agreement on a portfolio risk sharing arrangement of NGN37 billion (US$40.7million) to support seven (7) infrastructure portfolio companies of InfraCredit across seven sectors including energy, healthcare, manufacturing (inputs to infrastructure) and logistics.

The signing of the counter-guarantee agreement is in line with the Memorandum of Understanding executed by the two institutions in March 2022, under which InfraCredit and ATIDI agreed to collaborate and work together as risk-sharing partners, within the context of their respective mandates, policies, resources and instruments, to provide credit guarantees, co-guarantees and counter-guarantees/reinsurance, as applicable, on eligible infrastructure financing transactions.

This portfolio counter guarantee arrangement follows from the established strategic partnership between InfraCredit and ATIDI on a transaction basis, the first being the risk sharing arrangement on a 10 year 10-billion-naira digital infrastructure bond (US$24 million equivalent) issued in 2022 and subscribed by domestic pension funds.

Nigeria’s government aims to increase its infrastructure stock to up to 70% of GDP in line with peer emerging market countries, which requires an annual spending of above 7% of GDP over the next 30 years to close the infrastructure gap, therefore increasing institutional investor funding of infrastructure is crucial. Currently, within the Nigerian pension fund industry (with assets under management (AUM) of NGN18.3 trillion $11.8 billion) only around 1.5% of total assets are invested in infrastructure debt even though pension funds are permitted to invest up to 35% of their assets in corporate debt. Credit enhancements, such as debt guarantees, on infrastructure project financings will help attract interest from lower risk appetite investors like pension funds.

This portfolio risk sharing partnership with ATIDI is strategically important to enable InfraCredit underwrite large contracts without over-exposing its balance sheet, introduce mechanisms necessary to manage single obligor limit and the portfolio balance, and bring diverse experience, know-how and credit quality to the guarantee portfolio thereby expanding access to domestic institutional investments to bridge the infrastructure deficit in the country.

Speaking on the signing of the counter-guarantee agreement, the Chief Executive Officer of InfraCredit, Chinua Azubike, stated that “We are proud of the growth of our partnership with ATIDI, through this second risk sharing transaction, a first of its kind local currency portfolio counter-guarantee transaction, which will enhance InfraCredit’s capacity to issue more guarantees that will reduce the cost of capital and crowd in larger scale domestic credit, particularly from local pension funds and insurance investors to finance infrastructure development in Nigeria. Our partnership with ATIDI is a strong demonstration of the vital role multilaterals can play to help borrowing countries’ debt levels remain sustainable, by leveraging their balance sheets as risk sharing partners working alongside local institutions, to mobilise domestic resources from the private sector to finance infrastructure development in local currency whilst deepening domestic debt capital markets for sustainable development.”

Commenting on the agreement, Manuel Moses, the Chief Executive Officer of ATIDI, noted that: ” ATIDI is committed to supporting InfraCredit in mitigating risks associated with infrastructure financing, thus catalyzing investment, and fostering development in a vital sector. The portfolio counter guarantee provides a vital layer of protection, instilling confidence among investors and stakeholders while enabling InfraCredit to expand its reach and impact in facilitating access to affordable financing for critical infrastructure projects nationwide. This collaborative effort underscores the shared vision of ATIDI and InfraCredit in driving sustainable growth, enhancing resilience, and advancing Nigeria’s infrastructure development agenda.”

For further enquiries, please contact:
Infrastructure Credit Guarantee Company Limited
Media Enquiries: [email protected]
Guarantee Enquiries: [email protected]
Phone: +234 6312300

African Trade and Investment Development Insurance

Media Enquiries:
Lawrence Mensah
Sr. Communications Officer
African Trade & Investment Development Insurance
[email protected]

Note to the Editor

About InfraCredit

InfraCredit is a ‘AAA’(NG) rated specialised infrastructure credit guarantee institution backed by the Nigeria Sovereign Investment Authority, GuarantCo (a Private Infrastructure Development Group company), KfW Development Bank, Africa Finance Corporation, InfraCo Africa and African Development Bank, to provide local currency guarantees and mobilise long term debt financing for infrastructure in Nigeria. InfraCredit’s guarantees act as a catalyst to attract domestic credit from pension funds, insurance firms and other long-term investors into credit-worthy infrastructure projects, thereby deepening the Nigerian debt capital markets. InfraCredit operates on a commercial basis with a developmental role and benefits from private sector governance.

InfraCredit maintains the highest domestic financial strength ratings accorded to any financial institution by Agusto and Co. and Global Credit Ratings Co., two of the major domestic credit rating agencies and international rating agency Fitch Ratings. For more information, please visit www.infracredit.ng and follow us on Linkedin and Twitter

About African Trade & Investment Development Insurance

ATIDI https://www.atidi.africa/ was founded in 2001 by African States to cover trade and investment risks of companies doing business in Africa. ATI predominantly provides Political Risk, Credit Insurance and, Surety Insurance. In 2022, ATI closed the year with a gross exposure of US$8.1 billion, owing to a strong demand for ATI’s insurance solutions from the international financial sector and from African governments. Since inception, ATI has supported US$78 billion worth of investments and trade into Africa. For over a decade, ATI has maintained an ‘A/Stable’ rating for Financial Strength and Counterparty Credit by Standard & Poor’s, and in 2019, ATI obtained an A3/Stable rating from Moody’s, which has now been revised to A3/Positive.