GuarantCo, a member of the Private Infrastructure Development Group (PIDG), granted a portfolio guarantee of approximately 14.55 billion FCFA, or 25 million USD to Oragbank Togo. The guarantee mainly concerns telecommunications and road projects in Togo.
The largest bank in the country, Orabank will also benefit from capital relief allowing it to develop its infrastructure portfolio while remaining within the limits of a single debtor.
The transaction will result in the provision of improved infrastructure services to more than 500,000 people and support hundreds of jobs through Orabank’s continued lending to infrastructure projects. In addition, GuarantCo will contribute to the development of financial services in Togo where the rate of use of the banking system is low, notes a press release from the group published this Thursday, January 27.
“Through credit risk substitution, this portfolio guarantee increases Orabank’s prudential ratios by 742 basis points and 837 basis points to Tier 1 capital and solvency ratios respectively. As Basel regulations continue to be rolled out across the African continent, GuarantCo expects this transaction to be replicated with other lenders to ensure that infrastructure project financing is not compromised while necessary prudential safeguards are implemented,” the statement said.
According to Guy Martial Awona, Managing Director of Orabank Togo, the portfolio guarantee will strengthen the bank’s ability to finance the development of companies in the telecommunications, energy and infrastructure sectors.
This is GuarantCo’s second transaction in Togo, after that granted in 2019 concerning a liquidity extension guarantee (LEG) of 14.2 billion FCFA (23.8 million USD) to enable local commercial banks in Togo, including Orabank, to grant a 14-year fixed-term loan to Eranove.
