GCR Affirms InfraCredit AAA (NG) Rating, Outlook Stable
GCR Ratings has affirmed Infrastructure Credit Guarantee Company Plc’s national scale long-term issuer rating of AAA (NG), with a stable outlook. The rating of Infrastructure Credit Guarantee Company Plc reflects its established track record of mandate delivery on its strategic role as an infrastructure credit guarantee provider in Nigeria, GCR said.
The African-focused ratings agency added that the rating also recognises the company’s strong capital and leverage position, sound risk profile, and robust funding and liquidity.
GCR analysts said in the rating note that InfraCredit’s competitive strength is anchored on its developmental impact through the provision of credit enhancement on local currency debt instruments issued by corporate entities to finance eligible long-term infrastructure projects in Nigeria.
“The company has progressed well with its mandate delivery, reflected by the sustained growth in outstanding guaranteed portfolio which registered at NGN278.8 billion or USD174.7 million as of 30 April 2025 spread across prioritised and eligible sectors”.
Rating analysts at GCR noted that this growth trajectory is expected to be sustained over the medium term, given the size of the mandated deal pipeline of about NGN881.2 billion or USD552.1 million from 64 transactions.
In line with its business model, InfraCredit in 2024 increased its internal leverage limits to 7.5x from 5x, having met the set portfolio track record, the rating note stated. Analysts hint that the company has a stable management team with sound risk and portfolio management experience.
Capital and leverage assessment is a major rating strength, underpinned by the robust capital base. As of 30 April 2025, qualifying core capital, including the admissible portion of KfW’s subordinated loans, increased to NGN231.9 billion or USD144.9 million from NGN197.8 billion or USD127.6 million in December 2024, driven by equity injection via rights issue and private placement from both domestic and international investors.
As a result, the GCR gross leverage ratio – total qualifying core capital divided by the summation of total assets and off-balance sheet exposures- remains strong at 37.3% from 37.8% in 2024, according to GCR.
The net leverage ratio, adjusted for risk-sharing portfolios – co-guarantees and counter-guarantees- was also sound at 41.8% from 43.4% in 2024, according to the ratings update.
“Over the next 12-18 months, we expect the net leverage ratio to range between 30% and 36%, reflecting the company’s anticipated growth in guaranteed portfolio, continued capital raising efforts, and enhanced risk-sharing mechanisms”.
GCR rating note revealed that Africa Finance Corporation’s (AFC) seven-year initial investment of USD21.99 million or NGN35.2 billion redeemable preference share will mature in December 2025.
“Should AFC choose to exit earlier or InfraCredit opt for early redemption, the process would involve a share redemption and a subsequent offering on the NASD platform to existing investors at market price or price agreed by the shareholders”, GCR said.
Analysts hinted that given its current financial flexibility, InfraCredit does not anticipate any material adverse impact on its capital base from a full or partial redemption of AFC’s preference shares.
InfraCredit’s risk position is a positive rating factor, supported by stringent underwriting criteria as evidenced by the absence of any called guarantees since inception. Although some stress has emerged from two guaranteed entities, GCR said targeted remedial actions have been implemented to address underlying cash flow pressures, which should mitigate default risk.
The rating note revealed that concentration risk remains high due to the limited number of guaranteed entities at 21 as of 30 April 2025. However, anticipated portfolio growth from a robust transaction pipeline is expected to drive diversification over the medium term, the rating note explained.
InfraCredit is also largely exposed to the Nigerian sovereign, with 73.9% and 71.4% of the investment portfolio and total assets, respectively, held in Federal Government of Nigeria (FGN) bonds and treasury bills as of 30 April 2025, increasing counterparty concentration risk.
Nonetheless, the implementation of its three-year (2024–2026) investment diversification strategy could gradually reduce this exposure.
InfraCredit’s funding structure is assessed to be stable, underscoring the long-term funding from shareholders, strategic partners, and development finance institutions (DFIs).
The funding base increased considerably over the last 18 months to NGN326.2 billion or USD 204.4 million as of 30 April 2025 on the back of a successful equity capital raised and the USD15 million subordinated loan secured from the African Development Bank (AfDB) in September 2024.
Looking ahead, GCR said the plans for increased funding from DFIs and equity capital are expected to support the projected operational scale expansion over the medium term.
Liquidity is strong, with a considerable 89.5% of total assets held in near cash and FGN investment securities as of 30 April 2025, according to the rating note.
GCR stated that the liquidity position is further supported by the non-acceleration clause, which limits the amount payable on the guarantee in the event of a default to the sum due on the transaction at the time of default, and not the total outstanding guaranteed amount.
Ratings analysts said additionally, the long-term nature of the guaranteed portfolio, which ranges between 7 and 20 years, provides ample time to unwind any default. As a result, the 12-month forward liquidity sources covered uses by 4.6x and is expected to remain above 4x over the outlook horizon.
The stable outlook reflects expectations that the GCR net leverage ratio will remain robust, ranging between 30% and 36% over the next 12-18 months. The company’s business profile is expected to remain sound, with further growth in the guaranteed portfolio likely to enhance diversification, supported by a strong transaction pipeline estimated at NGN881.2 billion.
The stringent underwriting criteria is expected to continue to support the limited recourse to InfraCredit on the guaranteed portfolio, although the portfolio remains highly vulnerable to the fragile operating environment.
GCR said the strong liquidity position should be sustained by the conservative asset allocation and the absence of an accelerated clause on the guaranteed portfolio, with the liquidity sources anticipated to cover liquidity uses by over 4x over the outlook horizon.
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