The Pakistan Credit Rating Agency Limited
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Sehar Fatima

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PACRA Maintains Entity Ratings of GuarantCo Limited

Rating Type Entity
(30-Jun-21 )
(30-Jun-20 )
Action Maintain Maintain
Long Term AAA AAA
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

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 twenty one countries wherein, most of the exposure lies in corporate finance & project finance. There is increased focus towards Asia from Africa evident from enhanced portfolio in South Asian market. The emerging Asian market is representing above 50% of the portfolio. The current portfolio is skewed towards energy, transport, inputs for infrastructure, telecom and urban infrastructure sectors. Asset quality remains major concern as pressures are building up in key markets due to COVID-19 pandemic. The penetration of COVID-19 pandemic in South Asia especially India, in the last few months, may result in deteriorated performance of the entities. Steady growth has been seen in the gaurantee portfolio along with growth in equity base. The company is eyeing to call available committed callable facility. During CY20, guarantee income recorded slight downtick while other income from portfolio increased. Net income declined YoY in CY20. Liquidity indicators remained in 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 remains 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 – 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. GuarantCo's five members BoD comprises all non-executive directors who are qualified professionals with emerging and frontier market experience. Mr. Lasitha Perera, Chief Executive Officer of GuarantCo, decided to step down from his role in Apr-21. Ms. Emily Bushby, GuarantCo’s Chief Operating Officer, has been appointed interim CEO till the appointment of new CEO. Ms. Yukiko Omura is the chairperson of the board since 1st January 2018. Ms. Yukiko Omura carries three decades of experience in multilateral development agencies and leading investment banks.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.