InfraCredit has become the first local currency credit enhancement facility in sub-Saharan Africa to be accorded ‘AAA’ national scale credit rating. The ratings were assigned by Agusto & Co. and Global Credit Rating Co. (GCR), documents obtained by THISDAY revealed.
InfraCredit was established by the Nigeria Sovereign Investment Authority in collaboration with GuarantCo, with the key mandate of issuing guarantees to enhance the credit quality of local currency debt instruments issued to finance eligible infrastructure related assets in Nigeria, thereby acting as a catalyst to attract the investment interest from pension funds, insurance firms and other long-term investors.
It is expected that the successful operation of InfraCredit will address the constraints particularly facing the Nigerian pension market and motivate their involvement in investing in long-term bonds to finance infrastructure assets.
According to industry analysts, the ‘AAA’ rating accorded by the two major domestic rating agencies is the highest credit quality, demonstrating risk factors that are negligible and reinforces InfraCredit’s credit strength as a financial guarantor, following a rigorous process of assessment and risk analysis which tested its robust capital structure and corporate governance.
In announcing the ‘AAA’ rating, GCR said its decision was based on an assessment of InfraCredit’s envisioned business model, capital structure, financial projections and assumptions, and risk mitigation mechanisms. GCR’s statement also noted in particular, that “GuarantCo’s participation in InfraCredit through provision of contingent capital, and technical support in key operational areas (credit and risk management), supports the rating.”
When contacted, the Chief Executive Officer, Chinua Azubike, who confirmed the rating, noted: “We are pleased with the confidence demonstrated in our credit standing by the rating agencies, we remain committed to maintaining our strong fundamentals by implementing global best practices and governance standards with the support of our sponsors which provides the solid foundation we need as we pursue the initial phase of our growth.”