GuarantCo Limited

CREDIT RATING REPORT | Jun-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
27-Jun-25 AAA A1+ Stable Maintain -
27-Jun-24 AAA A1+ Stable Maintain -
27-Jun-23 AAA A1+ Stable Maintain -
30-Jun-22 AAA A1+ Stable Maintain -
30-Jun-21 AAA A1+ Stable Maintain -
About the Entity

GuarantCo Ltd. was established in 2005. GuarantCo is part of the Private Infrastructure Development Group (PIDG) and is funded by the governments of the United Kingdom, Switzerland, Australia and Sweden, through the PIDG Trust, the Netherlands, through FMO and the PIDG Trust, Canada, through the PIDG Trust and a repayable facility, plus France through a stand-by facility. Mr. Frank Gosselink has been appointed as Chief Executive Officer of GuarantCo. Mr. Frank assumed the office in October 2024. He was co-CEO of Cardano Development and the co-founder of TCX. He brings senior risk management experience from FMO and AEGON, with a background in econometrics and international development.

Rating Rationale

The assigned ratings of GuarantCo Limited ("GuarantCo" or the “Company”) reflect its robust shareholding structure, primarily anchored within the Private Infrastructure Development Group (PIDG). PIDG is ultimately backed by six prominent development partners: (1) UK Aid from the British People (FCDO), (2) Australian Aid (DFAT), (3) Sweden (SIDA), (4) Ministry of Foreign Affairs of the Netherlands (DGIS) & (FMO), (5) Government of Canada, and (6) SECO (Switzerland). The ratings draw comfort from the continued financial support provided by the shareholders through formal support agreements. In CY24, GuarantCo secured equity injections of USD 22.7 million. The capital infusions aim to (i) reaffirm shareholder commitment and enhance market confidence, and (ii) expand the Company’s guarantee capacity in alignment with its three-year business plan. GuarantCo remains focused on strengthening local capital markets by offering innovative credit solutions for infrastructure financing, contributing to sustainable economic growth across its operating regions. Its commercial operations, including transaction execution and portfolio management, are managed by GuarantCo Management Company (GMC), a wholly owned subsidiary of Cardano Development (CD). In 2024, the Company reached financial close on eight transactions totaling USD 225 million, which led to a 14% increase in the active guarantee portfolio, from USD 753 million to USD 855 million. The guarantee portfolio is well diversified by geography and industry sector. While GuarantCo has traditionally not relied heavily on external risk mitigation, recent initiatives such as counter-guarantees from the Swedish International Development Cooperation Agency (SIDA) and reinsurance through Canopius have been undertaken to manage risk. The Company has also adopted a prudent provisioning strategy in recent years. Its investment portfolio remains conservatively structured, highly rated, and aligned with a capital preservation mandate. Liquidity indicators continue to remain strong, supporting operational resilience. However, asset quality remains a concern as macroeconomic pressures persist due to the territories in which the Company operates. In response, the Company plans to increase its use of external risk mitigation instruments over 2025 and 2026 to support the growth of its business. In CY24, GuarantCo recorded higher guarantee and investment income, resulting in a net profit of USD 5.3 million. This improvement in profitability was largely driven by an increase in portfolio size, investment income, and effective recovery efforts, coordinated centrally and executed in close collaboration with regional relationship teams.

Key Rating Drivers

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.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

GuarantCo Limited

rating analysis

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Profile
Structure

GuarantCo Limited ("GuarantCo" or the "Company") was incorporated in Port Louis, Mauritius, as a private company limited by shares. The Financial Services Commission (FSC) issued a Category 1 Global Business Licence (GBL1) to the Company on 30 August 2005.


Background

GuarantCo is a Financial Institution with international operations across Africa and Asia to help reduce the infrastructure funding gap and alleviate poverty in lower-income countries. GuarantCo's registered office is located in Mauritius.


Operations

The key objectives of establishing the entity are to, i) support sustainable infrastructure projects in lower-income countries via guarantee provisions, which in turn, enable the said projects to raise debt financing and, ii) development of local financial debt markets, primarily in local currancies. Thus, GuarantCo facilitates bridging the funding gap that the local debt market would fail to meet due to capacity constraints, exposure limits, and other covenants.


Ownership
Ownership Structure

GuarantCo is owned 91% by the Private Infrastructure Development Group (PIDG), which is backed by six major development partners: (1) UK Aid from the British People (FCDO), (2) Australian Aid (DFAT), (3) Sweden (SIDA), (4) Ministry of Foreign Affairs of the Netherlands (DGIS), (5) Government of Canada, and (6) SECO (Switzerland).  The Netherlands Development Finance Company (FMO) contributes 9% of GuarantCo's total paid-up capital.


Stability

The Company's ownership structure is expected to remain the same in the foreseeable future.


Business Acumen

The business acumen is considered strong as PIDG and FMO are associated with the same business. During CY24, Global Affairs Canada became the new member of the PIDG group which further strengthened the ownership profile.


Financial Strength

GuarantCo is primarily funded by eight major development partners. Except for the Netherlands Development Finance Company (FMO), which contributes 9% of GuarantCo's total paid-up capital, all seven partners act jointly under the umbrella of the Private Infrastructure Development Group (PIDG). PIDG's Shareholders are six highly rated sovereigns - the United Kingdom (AA- by Fitch), Switzerland (AAA by Fitch), Sweden (AAA by Fitch), Netherlands (AAA by Fitch), Australia (AAA by S&P) and Canada (AA+ by Fitch). PIDG also has stand-by debt facilities made available by non-shareholding sponsors such as the AFD of France. These sponsors have consistently demonstrated their commitment to supporting PIDG’s mission through regular capital contributions. This ongoing support was reinforced in 2024 with a total of USD 22.7 million in new paid-up equity, reflecting the partners’ continued confidence in and dedication to PIDG’s mandate. 


Governance
Board Structure

GuarantCo's five-member BOD comprises non-executive directors - qualified professionals with emerging and frontier market experience.


Members’ Profile

Mr. Philippe Valahu serves as the chairperson of the Board, who is also on the board of InfraCo Africa. Mr. Philippe has more than three decades of experience in emerging markets infrastructure projects and export finance, and risk management in Latin America, sub-Saharan Africa, and Asia. Overall, the Board brings extensive experience across financial services, infrastructure finance, law, investment banking, and corporate governance, with leadership roles in global banks, regulatory bodies, and multinational firms. Their deep involvement in audit committees and strategic oversight equips them with strong capabilities in identifying, assessing, and managing financial and operational risks, reinforcing robust risk management frameworks in complex environments.


Board Effectiveness

Since CY18, all sub-board committees' functions have been delegated to GuarantCo Management Company Limited (GMC) for the smooth functioning of operations.


Financial Transparency

The Company's auditors, Binder Dijker Otte (BDO) LLP, are among the well-reputed audit firms internationally. The auditor has given an unqualified opinion on the financial results of CY24. 


Management
Organizational Structure

Management of the guarantee portfolio is outsourced to GuarantCo Management Company Limited (GMC), a fully owned subsidiary of Cardano Development. The Treasury investment book is subcontracted to UBS and Fidelity. 


Management Team

Mr. Frank Gosselink has been appointed as Chief Executive Officer of GuarantCo Management Company Limited (GMC). Mr. Frank has held office since October 2024. Mr. Frank was co-CEO of Cardano Development and co-founded TCX in 2007. He brings senior risk management experience from FMO and AEGON, with a background in econometrics and international development. The leadership team brings strong expertise in risk management, investment strategy, and infrastructure finance, with experience across global banks and development finance institutions. Their backgrounds in credit risk, regulatory compliance, and portfolio growth ensure effective oversight and alignment with GuarantCo’s strategic and risk objectives.


Effectiveness

On May 9, 2016, GuarantCo Management Company Limited (GMC) took over the management agreement from Frontier Markets Fund Manager Limited (FMFML) - the manager of GuarantCo since 2006. GMC is a 100% subsidiary of Cardano Development. The scope of GMC's core responsibilities is to; identify new business opportunities ensure compliance with related policies, make business plans and budgets; perform due diligence and negotiate arrangements for new guarantees to be initiated; and continuously review and manage of business portfolio and guarantee products.


MIS

Various manuals and policies have been put in place by the PIDG to overlook all management functions.


Risk Management Framework

GuarantCo’s Risk Management Framework combines bottom-up and top-down approaches to identify and mitigate key risks, including credit, liquidity, market, operational, reputational, and model risks. Macroeconomic and geopolitical developments are actively monitored through portfolio and thematic reviews. Oversight is provided by multiple governance committees—including Credit, Portfolio, and Risk & Finance Committees—with participation from senior leadership, the PIDG CRO, and non-executive directors. The framework is supported by regular risk reporting and a strong risk-aware culture embedded across the organisation.


Business Risk
Industry Dynamics

Credit Guarantee Institutions (CGIs) are non-bank financial institutions that enhance access to finance by providing credit guarantees to mitigate repayment risks, particularly for underserved segments like Small and Medium-sized Enterprises (SMEs). These institutions are licensed and supervised by central banks and typically require minimum capital. CGIs offer third-party credit risk protection to lenders by absorbing a portion of potential losses on loans in exchange for a fee. They are largely government-owned or funded by multilateral institutions, and given their developmental role, often carry high credit risk against their portfolios, relying on shareholder equity or grants for operations. Globally, formal SMEs in developing countries face a significant credit gap, estimated at approximately USD 5.7 trillion, which CGIs aim to bridge. GuarantCo Ltd, a PIDG member, supports infrastructure in low-income countries like Pakistan by addressing financial and technical barriers. InfraZamin Pakistan (IZP), also under PIDG, promotes private investment in local currency infrastructure financing. Pakistan’s first credit guarantee platform, National Credit Guarantee Company Limited (NCGCL), a joint initiative of the Government of Pakistan and Karandaz Pakistan, was established in March 2022 to strengthen the national credit guarantee framework.


Relative Position

GuarantCo is a specialized financial guarantor. It issues guarantees to enhance the credit quality of debt instruments, mainly loans, and bonds issued in local currency to finance infrastructure projects in emerging markets.


Revenues

GuarantCo generates revenue from two primary sources: (i) guarantee income, which consists of fees received from clients for the committed guarantees, and (ii) income derived from its investment portfolio. In CY24, GuarantCo realized fees on financial guarantee contracts at fair value through profit or loss (FVTPL) amounting to USD 15.8mln, higher than the USD 15.4mln recorded in the previous year, CY23. Additionally, the net investment income earned during the year amounted to USD 11.4mln, an increase from USD 7.0mln in CY23. Furthermore, there was a negative balance of USD 2.5mln in the change in the fair value of financial guarantee contracts and facility agreements at FVTPL, a positive movement of USD 2.9m compared to since last year's CY23 negative balance of 5.6mln.


Performance

In CY24, GuarantCo reported a profit after tax of USD 5.3mln against USD 4.1mln in CY23, which represents an increase of 29.21% since last year, attributable to increase in portfolio size, investment income and recovery efforts.


Sustainability

GuarantCo's portfolio has a major weight of guarantees/exposures in South Asia as per mandate, specifically towards South and Southeast Asia. The Company is aiming to expand its guarantee portfolio in the upcoming years.


Financial Risk
Credit Risk

The current portfolio encompasses a diverse range of twenty-four countries and twelve sectors. At end-Dec24, the size of the guarantee portfolio amounted to USD 1,107mln, indicating a 7.3% increase compared to the previous year-end figure of USD 1,032mln. GuarantCo reached financial close on 8 transactions in 2024, totalling USD 225m, resulting in active portfolio growth of 14% from USD 753m to USD 855m. At end-Dec24, the Company's exposure across different Asian countries was primarily concentrated in Vietnam (18%), followed by Cambodia (8%) and Bangladesh (7%).


Market Risk

The investment portfolio experienced an increase of 48% and stood at USD 183mln as of the reporting period (CY23: USD 123mln). Investments constitute a significant portion of the Company’s total assets and are primarily composed of debt instruments measured at fair value through profit or loss (FVTPL). The Company has investments of USD 79mln (CY23: USD 103mln) in the Institutional Liquidity Fund managed by Fidelity, a money market fund with no maturity date that is readily convertible into known amounts of cash and carries an insignificant risk of value change.


Liquidity and Funding

The Company's liquidity profile weakened during the review period, as reflected by a liquidity ratio of 171.1% for CY24 (CY23: 226.7%). The Company continues to benefit from strong and regular capital injections from its sponsors. In 2024, GuarantCo received USD 22.7mln in new paid-in equity, including USD 9.1mln from DGIS, USD 7.9mln from FCDO, USD 4.0mln from SECO, and USD 1.7mln from DFAT. Additionally, the Company enhanced its liquidity position through a USD 50mln liquidity facility signed with Standard Chartered Bank in Q1 2025.


Capitalization

The Company demonstrates a robust level of capitalization, evident in a healthy capital-to-guarantee portfolio ratio of 145 times as of the end-Dec24 (end-Dec23: 417 times). The shareholders' equity ratio for the Company stood at 82.5% as of end-Dec24, which is considered fairly adequate (end-Dec23: 81.3%).
 
 

Jun-25

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GuarantCo Limited

financial summary

(PKR mln)

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Dec-24
12M		 Dec-23
12M		 Dec-22
12M
A. BALANCE SHEET
1. Deposits With Banks 131,647 157,193 131,378
2. Investments 183,262 123,211 119,950
3. Guarantee Contracts 2,634 861 978
EARNING ASSETS 317,543 281,265 252,306
4. Trade and other receivables 11,388 14,442 15,555
5. Deferred expenses 682 4,409 790
6. Deferred Tax 432 432 432
TOTAL ASSETS 330,046 300,548 269,083
7. Derivative Financial Instruments 536 56 81
8. Financial Guarantee Contracts & Facility Agreements FVTPL 14,077 9,800 4,331
9. Trade and other payables 42,079 45,607 38,310
10. Provision - Guarantee payable 0 0 0
11. Other Liabilities 989 734 1,220
TOTAL LIABILITIES 57,681 56,196 43,942
12. Total Equity 272,365 244,352 225,141
TOTAL LIABILITIES & EQUITY 330,046 300,548 269,083
B. INCOME STATEMENT
1. Portfolio Revenue - Net 18,861 15,290 (2,466)
2. Finance Income 10,661 9,739 (3,405)
3. Fund Manager Fee & Administrative expenses (24,146) (20,787) (20,864)
Profit Before Taxation 5,376 4,242 (26,734)
4. Taxation (95) (155) (25)
Net Income 5,281 4,087 (26,760)
C. RATIO ANALYSIS
1. Profitability
ROE 2.1% 1.7% -11.8%
2. Liquidity
a. Liquid Assets/Gross Guarantees 171.1% 226.7% 209.4%
b. Liquid Assets/Equity 116.3% 115.1% 111.7%
3. Capital Adequacy
a. Equity/Total Assets 82.5% 81.3% 83.7%
b. Equity/Gross Guarantees 147.1% 196.9% 187.5%

Jun-25

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GuarantCo Limited

rating scale

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Jun-25

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GuarantCo Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
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    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
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  5. Monitoring and Review
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  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
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