BOAD IMPLEMENTS CREDIT INSURANCE POLICY FOR PART OF ITS LOAN PORTFOLIO TO ENHANCE ITS INTERNATIONAL CREDIT RATING AND FINANCING CAPACITY WITHIN WAEMU MEMBER COUNTRIES
Lomé, 13th July 2023. Following the example of major global financial institutions, the West African Development Bank (BOAD) has taken a significant step towards strengthening its portfolio by securing a credit insurance policy through the credit insurance market.
BOAD is pleased to announce the signing of a credit insurance policy amounting to XOF 278 billion (approximately EUR 424 million), representing 11% of its overall loan portfolio, with a consortium of nine leading private insurers based in Paris and London.
This substantial transaction follows BOAD’s initial venture into single-name insurance policies 18 months ago and marks a significant milestone in the implementation of the Bank’s strategic plan, referred to as “Djoliba”. The adoption of an “originate to distribute” approach has been instrumental in achieving this feat.
The primary objective of this initiative is to enhance the average rating of BOAD’s loan portfolio, which in turn will have a positive impact on the Bank’s investment grade rating.
By engaging insurers with ratings ranging from ‘A-‘ to ‘AA-‘, BOAD demonstrates its intention to establish long-term utilization of the credit insurance market as a mechanism for distributing balance sheet exposures. This strategic move aims to reinforce BOAD’s financing capacity for the benefit of WAEMU member countries. While this practice is well established in “mature” markets, it represents an innovative and pioneering approach within our region.
This newly acquired portfolio insurance policy covers all member countries within the WAEMU region. Its magnitude underscores the recognition by the insurance market of the robust nature of BOAD’s preferred creditor status and its distinctive role in the WAEMU region.
In response to this risk profile enhancement, President Serge Ekué expressed his appreciation, stating, “This insurance policy not only fortifies our risk profile but also that of our borrowers, allowing us to access resources on the most favorable terms from the capital markets. It further aligns with the goals set forth in the ‘Djoliba’ plan initiated in 2021, aiming to finance projects totaling XOF 3,300 billion by the plan’s conclusion in 2025, benefiting the WAEMU member countries.”