International development finance institution GuarantCo has closed its first syndication transaction backed by a credit insurer.
Lloyd’s of London insurer Canopius provided the non-payment insurance policy, with the arrangement brokered by credit and political risk insurance specialist BPL Global.
The transaction, a “significant first” for GuarantCo, will enable it to expand its portfolio, guaranteeing “larger transactions whilst managing its single sector, geography and obligor limits”, the company outlines in a statement.
“We are hoping that through this landmark placement, we will set a track record for GuarantCo within the insurance market and that there will be similar placements going forward,” says Layth Al-Falaki, GuarantCo chief executive. “This will further strengthen our strategic ambition to bridge the infrastructure financing gap in countries across Africa and Asia where it is needed most.”
GuarantCo, part of the Private Infrastructure Development Group (PIDG), helps finance privately sponsored infrastructure projects by providing local currency guarantees and aims to address the infrastructure financing gap in lower income countries across Africa and Asia.
The organisation says the transaction makes clear to the insurance market “the viability of supporting GuarantCo’s impact-driven transactions”, with the goal being the development of “a deeper relationship with the insurance sector”.
“By bringing together our portfolio analysis skills and the dedicated structuring capabilities within our credit and political risk business, we were able to design a bespoke solution to enable GuarantCo to help manage non-payment risks and pursue the growth of its portfolio in confidence,” says Canopius’ head of credit and political risk, Stephen Pike.
GuarantCo is funded by the governments of Australia, the Netherlands, Switzerland, Sweden and the UK, while France provides a standby facility and Global Affairs Canada a repayable facility.