Fitch Affirms InfraCredit’s Insurer Financial Strength Rating at ‘BB-‘
Fitch Ratings has affirmed Infrastructure Credit Guarantee Company PLC’s (InfraCredit) Insurer Financial Strength (IFS) Rating at ‘BB-‘ and National IFS Rating at ‘AAA(nga)’.
According to the rating note, the outlooks are stable. Fitch said the ratings reflect InfraCredit’s business profile as a Nigeria-focused financial guarantor, healthy capitalisation, low leverage, and sound, albeit volatile, financial performance.
These strengths are balanced against high investment and asset risk, driven by the company’s concentrated investments in sovereign bonds and exposure to local banks of low credit quality.
InfraCredit’s high concentration of investment in Nigerian sovereign bonds remains a key rating constraint. At end of 2025, the company’s investment portfolio was 62% of Nigerian sovereign bonds, 28% cash and bank deposits placed with two large local banks, and 10% corporate Eurobonds.
Investments in sovereign debt accounted for 139% of equity at end-2025, compared with 150% at end-2024. This concentration continues to drive a high risky assets ratio, although the ratio improved to 304% at end-2025 from 386% at end-2024.
Fitch said Infracredit’s liquidity is strong relative to expected liabilities, but liquidity buffers remain concentrated in sovereign debt, which could prove less reliable in the event of macroeconomic stress.
Ratings analyst stated that InfraCredit has a unique market position, with no direct competition and a growing business franchise, balanced by limited operating scale, moderate business risk and limited geographic diversification.
The company supports the development of essential infrastructure in Nigeria through guarantees across sectors including transportation, logistics, power and utilities, manufacturing, telecommunications, healthcare and construction.
Transportation, logistics, and power and utilities account for most of InfraCredit’s outstanding guarantees. Gross par outstanding grew 36% in 2025 and 50% annually on a five-year average.
Fitch believes demand will continue to be supported by Nigeria’s large infrastructure deficit, limited access to affordable local-currency financing, and a strong transaction pipeline.
The ratings analysts view InfraCredit’s capital position as strong, as reflected in a net par-to-capital ratio of 1.0x at end-2025, despite the company’s high-risk guarantee portfolio.
Fitch said the ratio increased from 0.5x at end-2024 due to growth in guaranteed exposure and a decline in equity following the redemption of preference shares.
Financial leverage increased to 54% from 46%, reflecting a reliance on redeemable preference shares and subordinated debt, which Fitch treats less favourably in its assessment of capital quality than paid-in common equity.
Fitch views InfraCredit’s guarantee portfolio as high risk due to its concentrated exposure to the Nigerian economy. Portfolio credit quality is non-investment grade on an international scale, although obligors are of strong quality by domestic standards.
Risk is partly mitigated by the absence of exposure to foreign-currency loans, diversification across sectors and regions within Nigeria, collateral backing, and the use of co-guarantees and counter-guarantees with development finance institutions.
InfraCredit’s profitability is primarily driven by investment income, while underwriting performance remains weak. In 2025, investment returns supported positive earnings despite unrealised FX losses and interest on subordinated debt, resulting in a return on equity of 6%.
Earnings remain volatile due to a large net FX position, although this improved to 39% of equity at end-2025 from 84% at end-2024.
Fitch views normalised profitability as moderate, with an FX-adjusted return on equity of 13% in 2025 and an average of 7% over the past five years, although real returns are constrained by high inflation in Nigeria, which we expect to average about 16% in 2026. Senate Defections: Umeh, Abaribe Dump ADC
