InfraCredit,ATIDI close N37 billion local currency counter-guarantee agreement

Cynthia Ezekwe

InfraCredit, a Nigerian specialised credit guarantee institution, and African Trade & Investment Development Insurance (ATIDI), a pan-African development finance institution based in Kenya, have entered into a landmark agreement to share risk on a portfolio of NGN37 billion worth of infrastructure credit guarantees.  

The signing of the counter-guarantee agreement builds on the Memorandum of Understanding (MoU) signed by InfraCredit and ATIDI in March 2022. Under the terms of the MoU, the two institutions agreed to work together to provide credit guarantees, co-guarantees and counter-guarantees/reinsurance on eligible infrastructure financing transactions, within the context of their respective mandates and policies.

The new portfolio counter-guarantee arrangement between InfraCredit and ATIDI builds on an existing strategic partnership between the two institutions. The first transaction under the partnership was the risk sharing arrangement on a 10-year NGN10 billion (approx. $24 million) digital infrastructure bond that was issued in 2022 and subscribed by domestic pension funds in Nigeria. 

The partnership with ATIDI is considered an important step for InfraCredit, as it will enable the institution to underwrite large contracts without overexposing its balance sheet and introduce mechanisms to manage the risk of a single obligor defaulting on its debt. In addition, the partnership brings diverse experience, know-how and credit quality to InfraCredit’s guarantee portfolio, which will help to expand access to domestic institutional investments for infrastructure projects in Nigeria. 

Speaking on the significance of the counter-guarantee agreement, Chinua Azubike, the chief executive officer of InfraCredit, expressed excitement about the continued growth of the institution’s partnership with ATIDI. Azubike noted that the new risk sharing transaction will enable InfraCredit to issue more guarantees, which will reduce the cost of capital and crowd in larger scale domestic credit, particularly from pension funds and insurance investors. 

“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,’’ he added. 

Manuel Moses, the chief executive officer of ATIDI, expressed the institution’s commitment to supporting InfraCredit in mitigating the risks associated with infrastructure financing and catalysing investment in the sector. Moses noted that the portfolio counter-guarantee provides a critical layer of protection for investors and stakeholders, which in turn will enable InfraCredit to expand its reach and impact across Nigeria.

Moses also highlighted the shared vision of ATIDI and InfraCredit in driving sustainable growth, enhancing resilience, and advancing the infrastructure development agenda in Nigeria. He noted that by working together, the institutions can accelerate the progress of critical projects that will transform lives and communities across the country. 

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