African Export-Import Bank (Afreximbank) said it has successfully arranged a syndicated $3.3 billion crude oil prepayment facility sponsored by the Nigerian National Petroleum Company Limited (NNPC Ltd).
The bank in a statement posted on its website said an initial disbursement of $2.25 billion has been made.
NNPC Ltd and Afreximbank had in August last year signed a commitment letter and term sheet for an emergency crude oil repayment loan.
The facility will provide some immediate disbursement that will enable NNPC Ltd to support the federal government in its ongoing fiscal and monetary policy reforms aimed at stabilising the exchange rate.
The loan is also expected help Nigerian authorities meet forex demand and improve the value of the Nigerian currency.
“An initial disbursement of $2.25 billion has been made. A second tranche of US$1.05 billion is expected to be disbursed subsequently,” the bank said.
It explained that this landmark financing is Nigeria’s largest crude oil prepayment facility and one of the largest syndicated loans raised in Africa in 2023.
“Investors were keen to consider ticket sizes of US$250 million and US$500 million amidst current headwinds and year-end pressures in the loan markets,” the bank said.
It further explained that the 5-year facility carries a margin of 6.0 per cent per annum above the 3-month secured overnight financing rate (SOFR).
It said the transaction structure has an embedded price balance mechanism where 90 per cent of all excess cash from the sale of the committed barrels (after debt service) will be released while the balance of 10 per cent will be used to prepay the facility, effectively shortening the final maturity of the facility and freeing cash flow from future pledged cargoes for use by Nigeria.
“The initial participating lenders are Afreximbank, Africa’s multilateral trade finance institution, Gunvor International BV, a Geneva-based multinational energy and commodities trading company and Sahara Energy Resources Limited, an African-owned, leading international energy and infrastructure conglomerate.
“Afreximbank’s extensive structuring and technical experience in arranging complex oil & gas financing facilities in Nigeria, Angola, Republic of Congo, South Sudan, Chad Egypt, Côte d’Ivoire, Ghana, etc was brought to bear in the successful closure of the facility, notwithstanding a very challenging market environment,” the bank said in the statement.
The bank acted as the sole mandated lead arranger, technical and modelling bank, book runner, facility agent, offshore account bank, inter-creditor agent and collateral agent, while United Bank for Africa Plc (“UBA”) acted as the local arranger and onshore account bank.
While lauding the successful financial close, Afreximbank President and Chairman of the Board of Directors, Benedict Oramah, explained that the facility further demonstrates the bank’s commitment to supporting African economies when such assistance is most needed.
“Afreximbank stands by its member countries in good and in difficult times. The disbursement of the initial US$ 2.25 billion under the facility will support Nigeria’s long-term economic stability, ease access to import financing for raw materials and essential goods, support industrialization and trade development efforts.
“We are pleased that despite the typical year-end encumbrances, our partners and investors rallied and raised the funds required in record time. We thank them for their support,” Mr Oramah said.
The NNPC Ltd Group Chief Executive Officer, Mele Kyari, commented on the transaction, noting that the proceeds of the facility have been made available to Nigeria as one of several efforts towards improving macro-economic stability.
“The participation of global, international and regional syndication firms is a further testament to the lending market’s appetite for financing sponsored by NNPC Ltd and signifies solid market confidence in Nigeria,” Mr Kyari said.
The Group Managing Director/CEO, of United Bank for Africa (UBA), Oliver Alawuba, said “UBA is delighted to participate in this transaction which accentuates its commitment to providing necessary interventions and solutions towards addressing economic issues in Nigeria.”
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