InfraCredit, ATIDI Sign Counter-guarantee Agreement on Portfolio Risk Sharing of N37bn

Oluchi Chubuxor

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 solutionsheadquartered in Kenya, have signed a local currency counter-guarantee agreement on a portfolio risk sharing arrangement of N37 billion ($40.7million) to support seven 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.

Speaking on the signing of the counter-guarantee agreement, the Chief Executive Officer of InfraCredit, Chinua Azubike, stated; “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, the Chief Executive Officer of ATIDI, Manuel Moses, 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.”