‘AAA’ rated specialised infrastructure credit guarantee institution, InfraCredit, on Tuesday said it had completed the drawdown of the US$10m subordinated unsecured 10-year facility under its Subordinated Loan Agreement with the African Development Bank (AfDB), an international financial institution and multilateral development bank.
The drawdown increases InfraCredit’s capital base to $146m or about N58.5bn, according to a joint statement by both institutions, quoting the Chief Executive of InfraCredit, Chinua Azubike, as expressing pleasure that the milestone has been achieve despite the impact of the coronavirus pandemic and the attendant changes to macro-economic assumptions.
The move is expected to strengthen its robust sheet and guarantee issuing capacity, he said, adding that “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,” Azubuike stressed further.
The statement also quoted Stefan Nalletamby, AfDB’s Director of Financial Sector Development at the time of the facility was approved by the bank’s board, as expressing satisfaction that the AfDB’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,” and ultimately increase private sector financing for critical infrastructure projects in key sectors including energy, agriculture, water, health and education, through local capital markets.
Specifically, the statement explained further, the facility will increase private sector financing for critical infrastructural projects in sectors such as power, renewable energy, telecommunications, healthcare, transportation, agriculture, amongst others.
The AfDB investment, it added, demonstrates the strong investor confidence in the fundamentals of InfraCredit’s business and will promotethe deepening of the local debt capital market.
InfraCredit enjoys the backing of the Nigeria Sovereign Investment Authority (NSIA), 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.
Its 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.