Infrastructure Credit Guarantee Company Plc (InfraCredit) has secured a $50 million subordinated debt facility from the International Finance Corporation (IFC) to expand its capacity to mobilise long-term local-currency financing for infrastructure projects in Nigeria.

The 10-year unsecured facility will be disbursed in two tranches of $25 million each, according to the company.

InfraCredit said the financing would strengthen its capital structure and increase its capacity to support infrastructure transactions across sectors including renewable energy, climate-smart agriculture, digital infrastructure, telecommunications, healthcare and transportation.

The transaction is also expected to support projects associated with green growth and other productive sectors of the Nigerian economy.

Unlike direct dollar-denominated project lending, the facility is intended to strengthen InfraCredit’s capacity to provide guarantees and financing solutions that help infrastructure businesses raise longer-term funding from Nigeria’s domestic capital market.

This is particularly relevant for infrastructure projects that generate revenues in naira but require long-term financing, as excessive dependence on foreign-currency debt can expose businesses to exchange-rate risks.

IFC’s Financial Institutions Group Director for Africa, Aliou Maiga, said the transaction was aimed at strengthening Nigeria’s infrastructure financing system and encouraging greater mobilisation of private capital.

“This investment reflects IFC’s commitment to strengthening Nigeria’s infrastructure financing ecosystem and mobilising long-term private capital,” Maiga said.

“By supporting InfraCredit’s institutional capacity, we are helping mobilise domestic resources for infrastructure investments that can drive economic growth, job creation and sustainable development across key sectors of the Nigerian economy.”

He added that IFC was seeking to deepen its partnership with InfraCredit as the company develops its role in Nigeria’s local capital market.

InfraCredit was established to help infrastructure companies access long-term financing from institutional investors by providing credit guarantees that improve the credit quality of eligible debt instruments.

The company said the latest IFC facility would provide additional institutional capacity as its transaction pipeline expands.

InfraCredit Chief Executive Officer Chinua Azubike said strengthening that capacity had become a priority as the company’s financing activities evolved.

“Building additional institutional capacity has been an important priority for InfraCredit as our transaction pipeline grows and our financing solutions evolve,” Azubike said.

“IFC’s investment reinforces that capacity and strengthens our ability to mobilise long-term domestic capital for infrastructure.”

According to Azubike, InfraCredit has developed relationships with development finance institutions operating across different levels of its capital and risk-sharing structure.

These include arrangements involving subordinated debt, portfolio risk-sharing, counter-guarantees, first-loss capital and specialised investment facilities.

“We look forward to building on this partnership with IFC as we work together to expand the flow of long-term capital into Nigeria’s infrastructure market,” he said.

IFC’s financing is supported by the International Development Association Private Sector Window’s Blended Finance Facility and the Concessional Capital Window.

Since commencing operations in 2017, InfraCredit says it has facilitated more than ₦600 billion in long-term local-currency financing across 28 infrastructure projects.

The company also says it has helped 14 first-time issuers access Nigeria’s domestic debt capital market.

Its guarantee model is designed to make qualifying infrastructure debt more attractive to long-term institutional investors, including pension funds, by reducing credit risk.

InfraCredit said transactions it has guaranteed have included Nigeria’s first 15-year green infrastructure bond, while corporate bond tenors supported through its platform have extended to as long as 20 years.

According to the company, 20 of Nigeria’s 25 Pension Fund Administrators have participated in InfraCredit-guaranteed infrastructure bonds.

The new IFC facility comes as InfraCredit expands beyond its core guarantee activities through additional financing structures intended to support infrastructure projects at different stages of development.

The company has also broadened its domestic institutional shareholder base and transitioned to a public company listed on the NASD OTC Securities Exchange.

For Nigeria, attracting domestic long-term capital into infrastructure remains important because roads, energy systems, telecommunications infrastructure, healthcare facilities and other major projects typically require financing over periods longer than conventional commercial bank lending can readily provide.

Local-currency financing can also help reduce the foreign-exchange mismatch that arises when infrastructure companies earn revenues in naira while servicing debt denominated in dollars or other foreign currencies.

The $50 million IFC facility is intended to increase InfraCredit’s capacity to bridge that gap by strengthening the institution behind the guarantees rather than financing individual projects directly.

How much additional naira financing the facility ultimately helps mobilise will depend on the transactions InfraCredit supports and the level of participation from domestic institutional investors.

For InfraCredit, the immediate objective is to use the additional capital capacity to expand its infrastructure pipeline while attracting more long-term domestic investment into projects across the Nigerian economy.

 

 

 

 

nfraCredit, IFC, International Finance Corporation, Infrastructure, Infrastructure Finance, Nigeria, Capital Market, Bonds, Pension Funds, Chinua Azubike, World Bank Group