Domestic rating agencies affirm Infracredit’s ‘AAA’ rating

Infracredit, a specialized infrastructure credit guarantee institution in Nigeria, has recently had its triple-A rating affirmed by domestic rating agencies Agusto & Co and Global Credit Ratings. This rating reflects the institution's strong credit quality, solid capital structure, risk management process, and high-quality underlying portfolio. Chinua Azubike, the CEO of Infracredit, joined CNBC Africa to discuss the significance of this rating for the company going forward. Azubike explained that the credit rating is a reflection of Infracredit's ability to meet its obligations and build confidence and stability in the domestic debt capital markets. The triple-A rating showcases the institution's commitment to enabling first-time borrowers and other issuers to access long-term local currency financing with its guarantees, thereby attracting investment from the long-term domestic investor base. One key theme discussed during the interview was the infrastructure gap in Nigeria, estimated to be around $3 trillion over the next 30 years. Azubike emphasized the role of public-private partnerships and private capital in filling this gap, especially in light of budgetary constraints exacerbated by the COVID-19 pandemic. Infracredit aims to facilitate more long-term financing for infrastructure projects, leveraging its guarantee portfolio to enable infrastructure companies to raise capital for up to 15 years. Furthermore, Azubike highlighted that Infracredit has grown its guarantee portfolio significantly over the past three years, demonstrating the possibility of securing long-term financing in local currency for corporate credit and infrastructure projects. By allocating more domestic credit to the real sector, the institution aims to promote job creation and local economic growth. Regarding investor feedback, Azubike stated that Infracredit has not experienced any calls on its guarantees or significant credit losses, showcasing the resilience of the projects it underwrites. He emphasized the importance of selecting high-quality assets tied to essential services with strong cash flows, even in market downturns, to build a stable and diversified portfolio for investors. In terms of the current interest rate environment, Azubike noted a decrease in rates from 15% to less than 10% due to interventions by the central bank. He highlighted the opportunity for borrowers to access the market at lower rates and for investors to diversify their portfolios with high-quality assets like Infracredit's guarantees, which are rated similarly to the sovereign. Azubike encouraged investors to allocate capital efficiently, especially in the current economic climate, to support productive sectors and drive local economic growth. Overall, Infracredit's reaffirmed triple-A rating by domestic rating agencies underscores the institution's commitment to enhancing infrastructure financing in Nigeria and attracting long-term investment to support economic development. With a focus on promoting job creation, local economic growth, and stable returns for investors, Infracredit continues to play a vital role in bridging the infrastructure gap and driving sustainable development in the country.