NSIA, GuarantCo set up $200m infracredit firm

The Nigeria Sovereign Investment Authority (NSIA) and GuarantCo have announced the establishment of an infrastructure credit enhancement facility in Nigeria (InfraCredit) conceptualized in 2014.

The US$200 million InfraCredit will provide guarantees to enhance the credit quality of local currency debt instruments (mainly in the form of corporate/infrastructure bonds) issued by eligible entities (corporates, state governments) to finance creditworthy infrastructure projects in Nigeria.

Intended as a sustainable framework for stimulating infrastructure investments in key sectors of the Nigerian economy, its successful operation will foster the development of the Nigerian debt capital markets.

Incorporated as a private limited liability company based in Lagos, Nigeria, InfraCredit will run on a commercial basis guided by international best practices and local governance standards. Its Board of Directors, will be comprised of representatives of NSIA, GuarantCo, institutional investors and independent members.

InfraCredit’s Board of Directors appointed Chinua Azubike as the company’s Chief Executive Officer effective January 11, 2017 at its inaugural board meeting.

It will be capitalised with up to US$200 million composed of paid-in equity and “second loss” contingent capital.

NSIA has committed to subscribe US$25 million (Naira equivalent) of the paid in equity, with other investment interests to be sourced largely from institutional investors and international finance institutions.

GuarantCo has executed a Callable Capital Funding Facility Agreement providing US$50 million of the contingent capital and will act as lead arranger for a further US$50 million to be sourced from international DFIs with high investment grade ratings.

InfraCredit is expected to become fully operational by Q2 2017.