InfraCredit: Most Innovative Infrastructure Finance Sub-Saharan Africa 2018

By some estimates, Nigeria requires US$3 trillion to finance its infrastructure deficit over the next 30 years. Others estimate that to bridge the current infrastructure gap and increase core infrastructure stock, Nigeria needs an investment of US$127 billion over the next 5 years translating to an average of US$25 billion per annum.

Whatever the size of the deficit, fact remains that Africa’s largest economy is being held back by an absent or inadequate infrastructure. To address the most pressing needs of Nigeria-s core infrastructure requires investments of at least $127bn over the next five years. InfraCredit aims to help with that. The firm provides guarantees in local currency in order to help raise the quality of debt issued to underwrite larger infrastructure assets in the country. Thus, InfraCredit bridges a gap left by Nigeria’s commercial banks which are unable to meet the demand for long-term capital.

InfraCredit sees an opportunity to significantly deepen Nigeria’s nascent domestic capital market by attracting investment from entities that take the long view such as pension funds and insurance companies. The firm has developed a number of innovative products towards this end.

Earlier this year, InfraCredit successfully completed its first-ever guaranteed bond transaction – a $28 million fixed rate bond due in 2027, issued by a company that designs, builds, and operates off-grid power-generating facilities. The Viathan Bond is also the first long-term corporate infrastructure debt instrument issued on the domestic capital market. Sixteen institutional investors, including twelve pension funds, subscribed to the bond.

The judging panel notes that InfraCredit boasts a triple-A credit rating on the local market. The firm was set up by the Nigeria Sovereign Investment Authority in close collaboration with GuarantCo – part of the Private Infrastructure Development Group (PIDG). In particular, InfraCredit seeks to offer solid investment opportunities to the country’s pension funds which, thanks to new legislation, are quickly becoming a major component of the domestic capital market. The judges recognise the supreme importance of financial engineering when it comes to unlocking funds for long-term development and agree to grant InfraCredit the 2018 Most Innovative Infrastructure Finance Sub-Saharan Africa Award.

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