Nigerian Infrastructure Credit Enhancement Facility
InfraCredit is a private company and was established by GuarantCo and the Nigerian Sovereign Investment Authority. It provides local currency guarantees to credit enhance the quality of debt instruments issued to finance infrastructure projects in Nigeria. Through this instrument, InfraCredit addresses the lack of long-term capital in Nigeria’s domestic banking market by attracting investments from pension funds, insurance firms and other long-term investors. Another core objective is to motivate Nigeria’s pension market to invest in long-term bonds to finance infrastructure projects. The provided guarantees are irrevocable and unconditional.
The guarantee obligations will be secured by:
- A right to reimbursement of any amount paid against the issuer under a recourse agreement entered into between the issuer and InfraCredit and
- A first fixed charge on specific properties/assets of the issuer and/or
- A first floating charge over the rest of its assets under a Security Deed, a Security Sharing Agreement and/or Intercreditor Deed.
Eligible projects and transactions
Infrastructure projects, including: energy supply and distribution infrastructure (except oil), waste management infrastructure, transportation, telecommunications/ICT, urban infrastructure (housing, hospitals, education), agricultural infrastructure, mining (under specific conditions).
Only debt instruments, including sukuk, are eligible for receiving guarantees.
Companies utilizing InfraCredit´s guarantees may provide financing to the following types of infrastructure services providers: special purpose vehicles, operating infrastructure companies, privatized companies, parastatals or public corporations, state and local governments. Details: http://infracredit.ng/wp-content/uploads/2017/10/ELIGIBILITY-CRITERIA_2017.pdf
- Tenor of coverage: The debt tenor can be up to 20 years.
- Currencies: Transaction has to be Naira denominated (Nigerian currency).
- Other eligibility criteria
- Credit profile: guarantee-seeking companies need to have an acceptable credit profile based on InfraCredit’s internal credit assessment.
- Investment grade rating minimum “Bbb.”
- Availability of adequate security package.
- Transactions demonstrate implicit government support.
- The asset value cannot be directly linked to oil.
- Compliance with InfraCredit´s environmental and social safeguards.
- Not mentioned on IFC´s project exclusion list.