InfraCredit, a ‘AAA’ rated specialised infrastructure credit guarantee institution, has announced that the drawdown of $10 million subordinated unsecured 10-year facility has been completed under the Subordinated Loan Agreement with the African Development Bank (AfDB) an international financial institution and multilateral development bank.
According to a statement by Stefan Nalletamby, the Bank’s Director of Financial Sector Development at the time of the Bank’s Board approval of the facility, “The Bank’s support will strengthen the capital base of InfraCredit, underpinning the expansion of the Company’s core business of guaranteeing of bonds issued to fund infrastructure projects. This adds to the Bank’s existing initiatives to mobilize domestic institutional savings and stimulate non-sovereign local debt capital market development in Nigeria. This ultimately helps to increase private sector financing for critical infrastructure projects in key sectors including energy, agriculture, water, health and education, through local capital markets”.
Specifically, this facility will help to increase private sector financing for critical infrastructural projects in sectors such as power, renewable energy, telecommunications, healthcare, transportation, agriculture, amongst others.
Analysts say this investment by AfDB demonstrates the strong investor confidence in the fundamentals of InfraCredit’s business and will promote the deepening of the local debt capital market.
Pursuant to the drawdown, InfraCredit’s capital base will increase to $146 million (c. N 58.5 billion).
According to the Chief Executive Officer of InfraCredit, Chinua Azubike, ‘’Despite the impact of COVID-19, and changes to macro-economic assumptions, we are pleased to have reached yet another milestone in our pursuit to strengthen our robust balance sheet and guarantee issuing capacity. Notwithstanding challenging market conditions, we have continued to demonstrate our strong fundamentals, solid underlying portfolio performance, proven track record and profitability. With the admission of AfDB to our capital structure, we are confident of our continuing ability to deepen market penetration and support access to long term domestic credit for the growing pipeline of infrastructure projects that will create jobs and support local economic growth.”
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InfraCredit is a ‘AAA’ rated specialised infrastructure credit guarantee institution backed by the Nigeria Sovereign Investment Authority, GuarantCo (a Private Infrastructure Development Group company), KfW Development Bank and Africa Finance Corporation to provide local currency guarantees and mobilize 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.
The African Development Bank (AfDB) Group is a regional multilateral development finance institution established to contribute to the economic development and social progress of African countries that are the institution’s Regional Member Countries (RMCs). The AfDB was founded following an agreement signed by member states on August 14, 1963, in Khartoum, Sudan, which became effective on September 10, 1964. The AfDB comprises three entities: the African Development Bank (ADB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF). ( BusinessDay)
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