Fitch Ratings (Fitch) has assigned a National Ratings of ‘AAA(nga)’ to Infrastructure Credit Guarantee Company Limited (InfraCredit) considering its solid position. InfraCredit’s “B+” International Long Term Financial Strength also assigned by Fitch is two notches above Nigeria’s sovereign credit rating score of ‘B’- thus, piercing the country’s foreign currency sovereign ceiling.
According to a statement, the ratings outlook is stable and said by Fitch to have reflected InfraCredit’s strong capitalisation and leverage, strong financial performance, stable debt servicing capability, dependable investment concentration to Nigerian sovereign bonds, and favourable business profile as a guarantor of Nigerian infrastructure development projects as well as its low expectations for any significant decline in InfraCredit’s Nigerian sovereign concentration in the near term.
Fitch regards InfraCredit’s company profile as ‘favourable’ as a specialised infrastructure credit guarantee institution that champions essential infrastructure development projects in Nigeria, its guaranteed projects are typically essential utilities and exposures are well collateralised, which reduce the overall credit risk of the guarantee portfolio, in Fitch’s view.
Fitch indicated that its ratings were also driven by InfraCredit’s dependable return on equity (2022: 15.6%) which has generally shown an improving trend in the past five years.
Fitch expects continued ramping up of operations will continue to improve the company’s economic scale.
Accompanying the ratings factors, Fitch described InfraCredit’s debt servicing capability is ‘good’ based on its objective stability in recent years as well as projects its importance as a guarantor of essential local infrastructure development projects which reiterates its mandate to act as a catalyst that attracts new capital and domestic credit for vital infrastructure project from diverse sources.
Speaking on the ratings outcomes, InfraCredit’s Managing Director/CEO, Chinua Azubike said, “Our ratings by Fitch reinforces the strength of InfraCredit’s business model, resilient capital structure, and quality of our guarantee portfolio, such that we have now earned a better credit rating than the country we operate in.
Well-structured infrastructure projects, especially when financed in local currency, and particularly in Africa, have one of the lowest default rates in the world, and this is evident in InfraCredit’s zero loss history.
Our track record demonstrates that the perceived risks of investing in African infrastructure are higher than the actual risks, and our mission is to use our credit enhancement tools to bring down the risk premium, build investor confidence and unlock more domestic resources to finance economic development in Nigeria”.
InfraCredit is an ‘AAA’ rated specialised infrastructure credit guarantee institution backed by the Nigeria Sovereign Investment Authority, GuarantCo and InfraCo Africa (Private Infrastructure Development Group companies), KfW Development Bank, Africa Finance Corporation and Africa Development Bank 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.
