Rating agency, Fitch Ratings (Fitch) affirms Infrastructure Credit Guarantee Company Limited’s (InfraCredit) Insurer Financial Strength (IFS) Rating at ‘B+’ with a Positive Outlook, and its National IFS Rating at ‘AAA(nga)’ with a Stable Outlook.
The ratings highlight InfraCredit’s robust capitalisation and leverage, along with its strategic investment concentration in Nigerian sovereign bonds (B-/Positive).
Despite being a Nigerian-focused financial guarantor, which presents certain business profile challenges and risks, the positive outlook underscores an improving operating environment for insurers in Nigeria, reinforcing the optimistic forecast.
InfraCredit’s capitalisation is denoted by Fitch to be exceptionally strong, with a net par/capital ratio of 1x at the end of 2023. Fitch also spotlights InfraCredit’s management’s proactive engagement with potential investors, including international development finance institutions and Nigerian private investors, intended to bolster InfraCredit’s capital base by approximately NGN 120 billion (USD83 million) over the next five years, with a mix of 66% subordinated debt and 34% equity.
A significant capital raise of NGN 40 billion is expected for 2024 through private placements to domestic investors and rights issues to existing stakeholders to support InfraCredit’s growing transaction pipeline. Fitch in its report, highlights that InfraCredit has not had any guarantee calls since its 2017 inception, reflecting management’s local expertise, risk management, deal selection and monitoring skills. Fitch continues to view InfraCredit’s company profile as ‘Favourable’ compared with other insurance companies in Nigeria, based on its important role in supporting the realization of essential infrastructure development projects as a financial guarantor.
Speaking on the ratings, Chinua Azubike, CEO, InfraCredit said “Fitch’s reaffirmation of InfraCredit’s IFS National Rating at ‘AAA (nga)’ with a positive outlook for the second time highlights our strong position for future growth and stability. The rating reflects our strategic commitment to diversification and sustainability in supporting projects that drive positive change in the Nigerian infrastructural space. Our robust investment strategy and deliberate effort to strengthen our capital base by attracting domestic institutional investors, and expand our guarantee capacity, enables InfraCredit to significantly unlock domestic resources, and finance large-scale infrastructure projects across Nigeria. This credible rating will support us to further build our project pipeline and support more sustainable infrastructure projects that will create jobs, increase inclusive access to essential services, and stimulate local economic growth. “
InfraCredit is a ‘AAA’ rated specialised infrastructure credit guarantee institution backed by the Nigeria Sovereign Investment Authority, InfraCo Africa (The Private Infrastructure Group Company), KfW Development Bank, Africa Finance Corporation, African Development Bank and domestic institutional investors – Leadway Assurance Company Limited and AIICO Insurance Plc, 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. InfraCredit maintains the highest domestic financial strength ratings accorded to any financial institution by Agusto and Co. and Global Credit Ratings Co., two of the major domestic credit rating agencies and international rating agency, Fitch Ratings.
InfraCredit’s guarantees promote (i) financial inclusion, by bri
