InfraCredit and ATI sign Memorandum of Understanding on Cooperation as Risk Sharing Partners
Tuesday, March 29, 2022 / 7:24 p.m. / Press release by InfraCredit / Header image credit: InfraCredit
InfraCredit, an infrastructure credit guarantee institution in Nigeria and the African Trade Insurance Agency (“ATI”), a pan-African multilateral development finance institution that provides risk fixsigned a Memorandum of Understanding (“MoU”) on cooperation as risk sharing partners to unlock access to long-term local currency debt financing for infrastructure development in Nigeria.
Under the MoU, InfraCredit and ATI will collaborate and work together as risk-sharing partners, within their respective mandates, policies, resources and instruments, to provide credit guarantees, co-guarantees and counter – guarantees/reinsurance, as the case may be, on eligible infrastructure financing operations.
To demonstrate the potential impact of their strategic partnership, InfraCredit and ATI recently entered into a risk-sharing agreement on a 10-year, €10 billion contract.infrastructure bond in naira (equivalent to $24 million). The bond was issued in February 2022 by a Nigeria-based digital telecommunications infrastructure company, a top issuer in the debt capital markets. InfraCredit provided a first-loss guarantee for the infrastructure bonds, while ATI provided a second-loss counter-guarantee on 50% of the principal repayments of the bonds to InfraCredit. The infrastructure bond was rated “AAA” by Agusto and Co. and GCR, and was oversubscribed by national pension funds.
Speaking at the signing of the MoU in Nairobi, InfraCredit Managing Director Chinua Azubike said that “One of InfraCredit’s key strategies to address the large infrastructure financing gap in Nigeria is to increase our guarantee capacity through risk-sharing partnerships with development finance institutions like ATI, leveraging their ability to share our long-term risks. The success of our initial risk-sharing transaction is a powerful demonstration effect of potential impact. Our goal is to move towards underwriting larger infrastructure projects and leverage more domestic credit from local institutional investors to support key priority infrastructure sectors in Nigeria.”
Speaking at the MoU signing event, Manuel Moses, ATI’s Managing Director, said: “Infrastructure development remains a major challenge in Africa and ATI is excited to to enter into this partnership with InfraCredit. We intend to support the acceleration of investment across the sector, which is a bedrock and enabler of productivity and sustainable economic growth on the continent. This risk-sharing agreement will not only ‘deepen and strengthen our strategic relationship with InfraCredit, but it will also provide an opportunity to mobilize financing in local currencies for infrastructure development, building a better Nigeria for tomorrow’.
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