GuarantCo provided a XOF 14.55 billion (c. USD 25 million) portfolio guarantee to Orabank Togo to enable the bank to grow its infrastructure portfolio including telecommunications and road projects.
GuarantCo provided a XOF 14.55 billion (c. USD 25 million) portfolio guarantee to Orabank Togo, the largest bank in the country. The guarantee allows Orabank to benefit from capital relief, enabling the bank to grow its infrastructure portfolio whilst remaining within single obligor limits. Supported projects include telecommunications and road projects in Togo.
It is anticipated that this transaction will result in the provision of improved infrastructure service 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 banking system usage is low.
In West African Economic Monetary Union (WAEMU) countries* the implementation of Basel II and III banking regulations have limited the lending capacity of banks to infrastructure projects. Through credit risk substitution, this portfolio guarantee provides uplifts to Orabank’s prudential ratios of 742bps and 837bps 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 whilst necessary prudential safeguards are implemented.
*West African Economic and Monetary Union (WAEMU) countries: Senegal, Togo, Burkina Faso, Mali, Benin, the Niger and Côte d’Ivoire.