Rating agencies, Agusto & Co (Agusto) and Global Credit Ratings (GCR) have re-affirmed the “AAA” credit rating of Infrastructure Credit Guarantee Company Limited (InfraCredit).
InfraCredit is a specialized infrastructure credit guarantee institution backed by the Nigeria Sovereign Investment Authority, GuarantCo and InfraCo Africa (Private Infrastructure Development Group companies), KfW Development Bank, Africa Finance Corporation, and African Development Bank, to provide local currency guarantees and mobilize long term debt financing for infrastructure in Nigeria.
Assigning the highest credit rating on InfraCredit, GCR noted, “the rating is underpinned by the uniqueness of Infrastructure Credit Guarantee Company Limited’s operations as a credit guarantee provider, and the company’s strong capitalisation, liquidity, and asset quality position, albeit counterbalanced by its self-regulated status”.
Notably, InfraCredit posts a strong financial profile score of 5.25, one of the highest in the financial services industry underpinned by the Company’s growing capital buffers, liquidity, and broader balance sheet strength, which are complemented by the sound governance and risk management culture; key fundamentals underscores the credibility of InfraCredit as a guarantor and more importantly the sustainability of the business model.
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InfraCredit grew its core capital by 64percent within the review period, following the equity investments of InfraCo Africa and retained earnings. The strength of the rating is also partly supported by the commitment of the capital providers and the prospect of InfraCredit to sustainably grow its capital base through internally generated capital by way of earnings retention and new capital injection from existing and prospective equity and debt capital providers.
According to Agusto, the rating takes cognizance of the technical, governance and capital support extended by the shareholders as well as GuarantCo Management Company Limited, the callable capital provider. In affirming the “AAA” rating and reflecting InfraCredit’s unparallel credit quality, Agusto & Co. asserted, “the rating assigned also reflects the quality of InfraCredit’s guarantees and investment portfolios backed by an acceptable risk management framework, good return on investments during the year and an experienced management team.”
The affirmation of the rating reinforces the strength of InfraCredit’s transaction structuring, quality of guarantee portfolio and overall risk management practice, especially as it impressively sustains the history of zero delinquency, a proven quality of its instruments and obligors. In addition, Agusto emphasized the increasing diversity of the equity base, noting the USD27mn investment of InfraCo Africa during the review period, as it reflects the capacity of InfraCredit to consistently scale-up capital, as may be required in growing its guarantee portfolio.
Speaking on the ratings actions, InfraCredit’s Managing Director/CEO, Chinua Azubike said, “the simultaneous affirmations of InfraCredit’s “AAA” rating, with stable outlook, by Agusto and GCR is a validation of our balance sheet capacity and more importantly the credibility of our guarantee instruments. We will continue to leverage our unique capabilities and innovative approach in deepening the debt capital markets for infrastructure finance in the country, particularly as we strengthen our collaboration with domestic and multilateral partners in unlocking blended finance and latent capital for commercially viable infrastructure projects, targeted at enhancing standards of living and supporting inclusive growth in Nigeria.”
