InfraCredit, a rated specialised infrastructure credit guarantee institution in Nigeria and FSD Africa, a specialist development agency, has signed a technical assistance agreement to unlock climate-aligned local currency infrastructure bonds in the country.

Under the pact, FSD Africa will provide funding for technical assistance to support pre-feasibility studies as well as the pre-transaction and transaction costs, including the design of innovative financing solutions for eligible projects that can issue climate-aligned local currency infrastructure bonds.

The successful implementation of the project is expected to aid 10 climate-aligned infrastructure projects to reach financial close, support new job creation and enable more capital markets instruments to be issued to institutional investors.

Speaking on the agreement with FSD Africa, the Chief Executive Officer of InfraCredit, Chinua Azubike, said: “To date, InfraCredit’s guarantees have enabled the issuance of up to $200 million (naira equivalent) of local currency infrastructure bonds, however, an increasing pipeline of climate-aligned infrastructure projects are constrained by limited financial resources being dedicated to deliver well-structured projects that can access the debt capital markets, thus, our collaboration with FSD Africa through technical assistance support will also involve the design of an innovative financial solution that will catalyse more bankable climate-smart infrastructure projects for InfraCredit’s guarantees, which will accelerate the issuance of creditworthy local currency infrastructure bonds to domestic institutional investors, thereby deepening the debt capital markets in Nigeria.”

The Chief Executive Officer of FSD Africa, Mark Napier, noted: “FSD Africa is pleased to facilitate the design of innovative financial markets products that will support institutions like InfraCredit provide access to inclusive capital. Our technical assistance will support the design of a vital climate-focused infrastructure facility that will bridge short-term greenfield capital with long-term capital markets funds.

Our partnership with InfraCredit intends to spur increased access to long-term finance and build financial sector resilience and environmental sustainability through local credit enhancement facilities (Guarantees) provided by InfraCredit.”