PACRA Maintains Entity Ratings of GuarantCo Limited

GuarantCo Limited, an international Joint Venture development financial institution, is the local currency guarantee arm of the Private Infrastructure Development Group (PIDG). It is directly and indirectly owned by five highly-rated sovereigns. Support of the sponsors is evident from time to time in the form of injection of capital. GuarantCo mainly operates in low-income, below-investment-grade countries as per its mandate. Currently, the exposure is in eighteen countries wherein, most of the exposure lies in corporate finance & project finance. There is increased focus towards Asia from Africa evident from the enhanced portfolio in the South Asian market. The emerging Asian market is representing around 50% of the portfolio. The current portfolio is skewed towards energy, transport, and inputs for infrastructure, telecom, and urban infrastructure sectors. Asset quality remains a major concern as pressures are building up in key markets as South Asia has been hit by a series of unique challenges, including inflation, and global economic slowdown. Growth remained slow in mid-22, although economies driven by services fared better. During CY22, guarantee income recorded a slight downtick while other income from the portfolio increased. Net loss from portfolio declined YoY in CY22. Liquidity indicators remained in a good range.
GuarantCo Management Company, a fully owned subsidiary of Cardano Development, is the fund manager responsible for GuarantCo's commercial operations. GuarantCo's ratings are dependent on its robust ownership structure & strong liquidity buffer. Prudent expansion and close monitoring of asset quality and internal obligor rating remain critical.

About the Entity
GuarantCo Limited was established in 2005. The company has executed fifty-seven transactions in twenty-two countries to date. The ownership of GuarantCo lies with five governments – the United Kingdom, Netherlands, Sweden, Switzerland, and Australia. With the exception of the Netherlands Development Finance Company (FMO), which contributes 11% of GuarantCo's total paid-in capital, the agencies act jointly under the umbrella of the Private Infrastructure Development Group (PIDG). GuarantCo also has stand-by debt facilities made available by non-shareholding sponsors such as the AfD and the government of Canada. Mr. Layth Al-Falaki (CRO at PIDG and Non-Executive Director on the Emerging Africa Infrastructure Fund’s boards) is the Chief Executive Officer of GuarantCo. Mr. Falaki has assumed his office since mid-January 2022. The entire reporting line of GuarantCo terminates into CEO. The entire management team consists of seven Executive Officers, who carry extensive experience which bodes well for the risk profile of the company.